EWZ (weekly info)-no change (below mid)
trend=no
direction=down (2 bars)
low= 71.67
rev= 79.63; mid= 75.65
The first letter in BRIC is not doing so well. After breaking below the rising wedge and getting below its SMA(89) it's trying to show strength by forming a bullish engulfing. We'll see.
RUXX (weekly info)new low 654.29
trend=down
low= 654.29
rev= 726.04; mid= 690.17
The second letter in BRIC is actually doing worse than the first letter. The move down has not been violent…yet. But it's below the trend line (1/08-5/10) and looking to test its SMA(233). As long as commodities hold up Russia should be ok. A major move down in commodities will turn this slow walk down some steps into a frictionless slide down ice covered steps.
Nifty 50 (weekly info)-no change (below mid)
trend=no
direction=up (2 bars)
high= 5927.50
rev= 5398.50; mid= 5663.00
The third letter in BRIC is looking to play catch up with Russia as it's now trading below its weekly 3LB reversal price. It's also broken below its lower trend line.
Shanghai Composite (weekly info)new low 2858.46
trend=down
low= 2858.46
rev= 3030.02; mid= 2944.24
The fourth letter in BRIC has broken down also. The move down is accelerating. It's is now below its 50% retrace and SMA(55). It also failed its upper trend line (8/09-11/09). I thought the BRICs were leading us out of the recession.
65 comments:
@AAIP
...from last nights thread...
Believe me when I say that I feel like a dick sometimes laying it on thick the way I do (and with the tones that don't carry across the cyberpage as well as they would if I were just having a straight out conversation with someone...
Anyway... Here's the thing...
I suppose one of the 'metrics' in understanding a currency collapse (or transformation, as the case may be) would be if a person has ever had first hand experience with it...
I have...
The first time I went to Brazil (in 1987)... Hell - it was my first real time traveling out of the country 'cept for having been in Canada a couple of times)... Anyway, I leave Brazil and had about $40 (dollars worth) of cruzados... The people who brought me there were already inviting me back in March of the next year (6 months later)... So I'm at the airport and decided not to bother to exchange my cruzados for dollars (being as I might have use for them when I came back in 6 months)...
As it turns out, the only use for them when I got back was as toilet paper... They were worth about a nickel (bitchez) in dollars by that time...
I had the same experience in Argentina... Not so much me, but a good friend of mine who came to live with me in LA at the time, who came from a fairly wealthy family that lost a lot of their assets when the currency just went up in flames... Luckily, she had a dad who had gotten most of his money out and was living in Mexico, but anything not nailed down (or physical) in Argentina just went up in smoke... I've been to both Brazil & Argentina numerous times & it's real funny to see what cars people drive (this is a little 'dated' because we're talking mostly late 80's early 90's)... But people would pay CASH (a lot of cash) for just about any imported car they could get their hands on... I used to sell audio cassettes, but I had to stop because in the process of both countries going thru currency crises, what used to be affordable (my price in 'dollars')... By the time I'd gone back, it was like a one month salary for them...
I went thru the same situation (only slower) in Italy... First time there in 1990, it was like 1200 Lira to the dollar... By the time the Euro came along (a decade later), it was over 1800...
The exchange allowed me to do one good thing... I bought a house (in Lira), then it all got re-valued to Euros, then the Euro took off vs. the dollar... The problem was, I basically worked myself out of viability (because really people couldn't afford my pay demands)... Italians are more conditioned to live cheaply...
In other situations (which I wasn't involved with specifically)... I have right here on my desk, a Zimbabwe ONE HUNDRED TRILLION DOLLAR note... My mom brought it back when she went there on a vacation...
So yeah... I've seen a lot of inflation & hyperinflation... Can't say that I've ever seen a lot of deflation... Unless you call the Dow going from 14,000 to 8,000 deflation... Or silver going from $20 to $8 deflation...
In either case... What's the Dow at today? What's silver at today? What's gasoline at today? Are median home prices back to 1980's levels?
Oh yeah... It's coming... It's coming... Just you wait... Don't go to sleep, the DOW will be at 400 any minute now, and the house you bought for $279,000 with 100% financing will be worth $50,000 (making you a quarter mil in the hole) any minute now...
& I'm going to become the richest person on the planet when I'm the only one holding all those put bets for the day that all happens... Jamie, Lloyd, Vikram... They'll all be lining up to pay me...
Meanwhile - Everyone else will be living in cardboard boxes because the government isn't collecting any more tax receipts while all these assets deflate...
But the above are just 'stories'... It'll never happen here... Not to king dollar (which is backed by what? again? somebody please remind me)...
" Unless you call the Dow going from 14,000 to 8,000 deflation"
how about M3 growth turning negative YoY for the first time EVER
not doing it for you?
how about M3 growth turning negative YoY for the first time EVER
not doing it for you?
The first things that come to my mind (which I'm certain that I couldn't even find accurate answers for) are as follows:
- Who publishes the data? (& if the answer is: "The government &/or the central banks" you scored a bingo)... We all breathlessly await NFP numbers & CPI & PPI... Published by who?
- How do you know if the standard definitions of (currency in circulation & demand deposits) are even the right measures anymore? Different subject, but think U3/U6... It seems nowadays that any published report can come out to read how somebody wants it to be read
- What's the importance of M3 in a global economy... Or, at minimum, when raw goods become finished goods across multiple borders, & with arguably 4-5 major currencies competing on stage with each other, how can currency in circulation & demand deposits in dollars really mean the same thing that it did decades ago? Maybe I'm missing something obvious, but I need an explanation...
I could go on, but the bottom line is that I believe M3 can easily be a massaged number...
Basically, another way that the CB's can justify printing to infinity...
See??? Look here!!! M3 growth is turning negative... "My name is the Bernank & I studied the Great Depression, and these are my conclusions... We have to drop dollars from helicopters to avoid that scenario... Nevermind the fact that those dropped dollars don't end up circulating... They just paper over bad balance sheets (with a little on the side to be used for 'spec-a-lation', so we can have our CASINO NIGHT)... & if prices for the hoi polloi keep rising, we'll just call it TRANSITORY (which it "is", until QEn is announced)... Or, due to the more sophisticated diets in emerging countries..."
CV,
the government stopped publishing M3 many years ago, and there's a reason for that, and to your point about demand deposits, again, this was discussed over 10 years ago, there are less than published due to bank rules that changed in the early 2000's.
but no matter, we all rationalize away the things we don't want to think about
and CV, I'm NOT giving some long explanation on these things such as M3 or demand deposits because I already have for over 3 years, you can choose your own path without my input, I'm not wasting my time doing all that again.
What could I possibly explain to you anyway, you are here still talking about hyperinfaltion?? You can look at every episode of hyperinflation since the 1930's and you'll find at least one similar thing amongst them, which was double digit increases in yields, across the board, per MONTH.
Yesterday the 10 yr yield was not far from a flat 3%, for starters, I'm selling the idea it'll be at 13 at any point in the next year at minimum.
Hyperinflation isn't happening until debts get wiped out, it's the highest probability.
Ben,
I think you are right. Indebtedness will control demand. And demand will fall.
...Just look at the UE today...not because people think the economy is picking up and chronically unemployed bubbas are now looking for work...this is just more evidence of weakness.
CV,
I'm curious about something you said yesterday that "the paper markets still don't realize coin dealers are selling at a $5 premium over spot"
What exactly do you mean by that comment. Are you implying that the paper market should always trade at the premium above spot that dealers charge in order to make money?
"but no matter, we all rationalize away the things we don't want to think about"
That's the part that I agree with...
My bottom line point is that I feel in this environment, one has to follow their instincts...
My instincts tell me that we're leing lied to all up and down the block about everything from:
- unemployment numbers
- CPI & PPI numbers
- birth certificates
- WMD's
So forgive me for not embracing a data point that "tells me" that YOY M3 growth turned negative for the first time ever...
Forgive me for NOT believing that the birth certificate that Obama put up was bonafide (& not doctored)...
Forgive me for scratching my head and wondering what caused WTC7 to come down, or that no scraps were ever found from the supposed plane that hit the Pentagon... That no cameras (on the most fortified military building on the planet) caught it... That not a blade of grass was harmed in the operation, or that the so called "plane" hit the Office of Naval Intelligence...
Forvive me for scratching my head wondering why the FBI had helmet cams & AP photo ops for going in after friggin' Elian Gonzalez... But Navy Seal teams didn't bother with all that on the most hunted man on the planet for a decade... Or why there was a burial at sea... Or why Leon Panetta isn't in that "situation room" foto...
I know these rants are all OT...
But the point is... I believe we are constantly fed data which ultimately underscores the "agenda" of people who want to hold power for themselves...
Whether they end up succeeding is another story, but they seem to be doing a pretty good job of it because I've heard more about Hines Ward winning DWTS this week than I've heard about M3...
"the paper markets still don't realize coin dealers are selling at a $5 premium over spot"
What exactly do you mean by that comment. Are you implying that the paper market should always trade at the premium above spot that dealers charge in order to make money?
---
No... I probably stated it badly (because even in re-reading it myself, it seems a little unclear)...
Mostly, I was simply trying to illustrate the disconnect between paper & physical markets (which, I believe, in the future, will go beyond normal margins & markups)...
With silver, I don't really think it's been illustrated yet (because I think the SPOT price will have to dip down into the 20's to make it become evident)...
So I'm just throwing that $5 over spot price out there for now (because it's real)... If spot silver is $37.24 (as we speak), and I walk into any coin dealer, I'm going to have to pay $42.24 for a 1 oz. maple or AE...
That $5 premium ought to more or less follow within the range of, I'd say $32-$50 "spot"...
Over $50 you might see the margins start to increase (perhaps because people would get into frenzied buying, and the dealers take advantage of that)... I'm not expecting to see that yet...
But UNDER $32... What's going to happen is that the premiums on the highly prized stuff, I'm predicting, are going to rise as well... EITHER THAT, or they stay the same, but are perpetually out of stock...
Under $30... A lot of physical buyers (like myself - who hasn't added any physical since February) are going to start adding again...
They're going to sell out quickly and/or the premiums will rise...
Ironically, what may happen could be a glut (over $50) because a lot of supply might then come out of the woodwork... That would be grandma's sterling set of 92.5% that will get sent off to the refineries to mint more bars & coins... Theoretically, it might take awhile to work off that inventory...
In any case, my 'point' is that dealers still use spot prices to base transactions now... But if incessant backwardation occurs, a cottage market will begin to be established whereby people wanting physical won't be beholden to the spot price...
If that's hard to conceptualize, think about if Obama read off his teleprompter that he was going to mandate that gasoline prices across the board had to go down to $2.00 (but still free for Peggy Joseph)...
What would happen... Yeah, everyone would fill up for $2.00 (for about a day - when the supply ran out)... There might be incremental new shipments that came in, meaning, if you waited in line, you could probably get a gallon or two a week), but that's it...
If you wanted MORE, you'd have to go to your neighbor (who was hoarding it in their garage)...
Think he'd sell it to you for $2??? No way Jose! (or Hugo Chavez - as the case may be)...
cv,
just to be clear I rationalize too, "we all" includes me
Thanks for sharing the your "personal experiences with hyperinflation", CV. (And I agree with your sentiments...often do.)
Crude oil....
Would be playing this one long here for a "trade."
Looks like a similar setup to silver. Looks like something concluded a 98.20.....
$100 should be support now. Would not want to be carring crude length below 99.50.
CAT showed an important daily candle yesterday, LULU looks like it could break up out of a triangle
getting constructive on a handful of energy stocks that have gotten whacked pretty hard the last several weeks, at least for a trade.
http://tinypic.com/view.php?pic=330sqzb&s=7
@wunsa (9:35)
Again... I'm not trying to be a dick on purpose (though oftentimes I manage to end up being an accidental dick)...
I just wanted to throw out ACTUAL experiences I've had with inflation, or hyperinflation... & I didn't even include the 70's & gas lines (odd/even days)...
On the deflationary side... In my 50 years I never remember seeing it happen (except for the effects of stock market crashes or the real estate bubble), the effects of which I'd more describe as deflating asset bubbles rather than outright deflation...
I suppose the declining prices of consumer electronics could be tossed into the mix, but the companies that make those products seem to basically be still doing business, so I don't see that any real calamities have occurred...
---
It was an entirely different thing to witness Argentinians & Brazilians who had income, trying to buy something, ANYTHING, as it came off the boats (like crappy used Honda Civics, or whatever) just to get their paper money into something before it lost its value...
---
The ringing in my ear right now is from all the 'smart people' saying "Well - why didn't they just buy gold or silver"
The ringing in your ear right now is CV saying "BWHAHAHAHAHAHAHAHAHAHA"... Good luck to them trying to find any...
In fact... many of them would spend half their time traveling abroad, just accumulating things (even dollars), but it was very hard to get it back into their own country...
Greece is going to be in a big mess if they get tossed out of the Euro...
It used to be fairly easy just to get your hands on some dollars... Still basically is...
But those were the days BEFORE the Fed was buying US Treasury Debt...
We'll see how it plays out going forward... They might prefer gold next time around...
ben22
That CAT bullish engulfing "looked" promising. It failed to close the gap and is trading lower today. So it doesn't look like it will get confirmed.
Ra,
looked like a fakeout candle to me, all the other technicals in that chart are bearish, also have the 20/50 cross now
I was thinking we could get as low as $95 on the intial move after my yellow line was broken, I see on your charts that 97 is the monthly 3lb reversal....going to be interesting.
I'm still short with half my position now.
http://finviz.com/futures_charts.ashx?t=SI
HOD: 38.84
now: ~37.04
ibid.
McB,
re: M3, et al, etc.
how does one Account for things like the FDIC's backstopping the 'Assets' of "Failed Banks" that are taken over/acquired in those 'Midnight Wedding Ceremonies' .. ?
You can look at every episode of hyperinflation since the 1930's and you'll find at least one similar thing amongst them, which was double digit increases in yields, across the board, per MONTH.
Yesterday the 10 yr yield was not far from a flat 3%, for starters, I'm selling the idea it'll be at 13 at any point in the next year at minimum
---
Ask yourself what yields would be without QE...
Where are the buyers of $100 billion a month of issuance (and perhaps increasing when [yes - I said "when"] the debt ceiling gets raised)...
10yy is 3% because of Fed intervention... Period...
Now... I'll agree with you that if the Fed removes itself from the picture, and we get TRUE DISCOVERY of bond yields, then we're more likely to see double digit yields...
Which would collapse the economy because both the Federal Government, State & Local economies would not be able to fund anything... Tax receipts would plummet, borrowing would stop, people would default...
That's the third rail...
There is ZERO... I mean ZERO... political will to step on that rail... Even the "teaparty" blowhards don't want that (because in the minds of the people, it would have been the AUSTERITY that caused the problem)...
So the Fed will keep on printing, and the Treasury will keep on borrowing... Prices will go higher & higher, punctuated by brief moments of correction...
Sooner or later, China will get pissed (probably already are) that the debt that is owed to them is being inflated away...
So their only real choice (other than war), is to impose their will by taking down physical assets in the process (PM's, oil, industrial metals, etc.)...
At some point it will be a "de facto" backing of their currency (simply because the whole planet will be competing for the same resources - and all the US has to offer for the resources are printed dollars)...
Wow. Silver made it up to 38.83 before falling back to 37. SMA(55) is 38.73 and the 50% retrace is 38.05. Both were tested and failed. Also the SMA(21) has been good support but currently is acting like resistance.
Don't you love when the S&P is down and the dollar is down. F'ing up correlations everywhere.
AAIP,
Your question is a non-starter, FDIC isn't "backstopping" anything, another myth there.
CV,
Wow dude, charts are handy if only to reveal what already happened so we can judge the validity of stories versus history, all sounds great what you say, but denies the FACT that yields were screaming lower prior to QE, then QE started and they went way higher, QE is now coming to an end and they are heading lower again.
Prior to QE the masses said that it would send yields lower, it did the reverse, now as QE comes to an end the same masses say that surely yields will go higher now, color me unimpressed.
@ben
That still fails to answer what entity is capable of taking down $100 billion in issuance every single month???
Got an answer for that???
If 'YES' who?
If 'NO', then tell me where you think the 10yy would be in fairly short order...
or is it just wrong for me to ponder on these questions?
You see... I'm not sitting here trying to make correlations on QE with respect to Treasury yields (or whether QE2 was supposed to make yields go down, but didn't, and now it's ending and yields are, in fact, going down)...
Instead, I'm simply stating that QE is "monetizing"... Plain & simple (whether that money makes it into the Russell 2K, or UST's is for traders to decide)...
There can be no other long term effect of "monetization" other than for the currency to get debased versus physical assets...
So I still remain with the question... What entity is capable of taking down $100 billion per month in issuance?... Hell - even Bill Gross is out of that picture (and even marginally on the short side of that trade)...
http://www.marketwatch.com/story/judge-voids-wisconsin-law-on-union-bargaining-2011-05-26
Judge voids Wisconsin law on union bargaining
By Jeffry Bartash
WASHINGTON (MarketWatch) A Wisconsin judge on Thursday struck down a controversial law that would have taken away collective bargaining rights from state employees. Judge Maryann Sumi said the Republican-controlled legislature broke the state's open-meeting law when it passed the bill on March. The law would have stripped most unionized state workers of the right to bargain collectively on any matters aside from wages, such as health-care benefits or working conditions. Sumi issued a temporarly restraining order in March to prevent the state from enacting the law until she held a hearing. The case is now expected to proceed to the state Supreme Court. The proposal was originally pushed by Republican Gov. Scott Walker as a means to curtain rising government costs and reduce the state's budget deficit.
Mish is probably having a conniption fit right about now...
From Belarus:
And here are some additional observations from Bloomberg on the country that everyone in the media continues to ignore, yet which will very soon be the model for virtually everyone else engaging in central planning warfare.
The Belarusian central bank let the managed ruble weaken by 36 percent versus the dollar on May 24 as demand for dollars and euros from importers and households threatened to derail an economy already laboring under a current-account deficit equal to 16 percent of gross domestic product. Russia and other former Soviet partners last week agreed to give Belarus a $3 billion loan and urged President Aleksandr Lukashenko’s government to sell $7.5 billion of assets to replenish the state’s coffers.
Finance ministers from former Soviet nations agreed in Minsk on May 19 to give Belarus up to $3.5 billion over three years, with the first $800 million payment expected in the week after a separate meeting on June 4, Russian Finance Minister Alexei Kudrin said in Moscow yesterday.
The Nationalnyi Bank Respubliki Belarus set its official dollar-ruble rate at 4,931 for today’s trading, from 3,155 on May 23, according to its web site. Trading of foreign currency between companies, banks and individuals needs to stay within a 2 percent range of the daily rate, the regulator said May 23, when it announced the devaluation and reintroduced restrictions lifted on the interbank market on April 19 and for households on May 11.
Devaluing the currency will only worsen the situation for Belarus, VTB’s Moiseev said.
“The main problem is that the economy produces goods which consist of little else than a combination of imported spare parts,” he said. “So devaluation only makes things worse.”
Belarus’s economy effectively collapsed in 1991 as the disintegration of the Soviet Union eliminated natural markets for the country’s exports of farm machinery, textiles and agricultural products.
The catalyst for the country's imploding economy: socialism and price controls. Sound familiar?
Lukashenko reintroduced controls on prices and the currency and re-nationalized some companies and infrastructure after coming to power in July, 1994, on a platform of “market socialism.” The nation’s economy returned to growth in 1996, according to World Bank data.
At the Minsk Refrigerator Plant Co. shop in the capital today, about 20 people queued in drizzling rain to use their rubles to buy fridges. While the shop didn’t open on the day of the devaluation, most of the models in the store already had ‘Sold Out’ stickers on their doors.
“I came on Saturday and it was a nightmare, the store was stormed by people who wanted to spend their rubles because of rumors about the devaluation,” said Nikolay, a 74-year-old pensioner who declined to provide his last name. His entire savings of 6 million rubles now buy one fridge compared with three before the devaluation, he said.
The people are not happy...
The devaluation lifted the local price of automobile fuels as much as 24 percent, according to Belneftekhim, an industry group for the country’s oil sector. Last night, about 50 people protested the price increase in the car park of a Minsk hypermarket.
“I can’t describe how I feel without using obscenities, this is all our government’s fault,” said Sergey, a 32-year old attending the protest who works for a computer importer. “The whole world tells them, guys, you have economic problems, you should do something, and all they did was live off getting more and more loans.”
Who can blame the country if it devolves into civil war: as a result of Monday's decision the average salary was "1.6 million rubles in April, according to the government statistician. Converted into dollars, it fell to $325 after the May 24 devaluation, from $507 a day earlier, using central bank exchange rates."
Naturally, the IMF wuz here:
Both the IMF and the EBRD have blamed Lukashenko’s spending before last year’s presidential election for much of the economy’s woes. Lending was increased by 38 percent last year and public-sector salaries rose by about 50 percent, the Washington-based IMF said in a March 9 report.
Belarus got a $3.5 billion bailout loan from the IMF during the global credit crisis and the country has more than $2 billion of ruble and dollar debt outstanding. Foreign-currency reserves hit a 1 1/2-year low in March.
“The ruble is probably still too strong, but devaluation hurts the average consumer through imported inflation and deteriorating purchasing power,” Sanna Kurronen, an economist in Helsinki at Danske Bank A/S, said by e-mail yesterday. “There is really no easy way out of this economic distress and the only way is to do a major reform in the country.”
Here comes hyperinflation...
The price of children’s diapers has “gone completely insane” in Minsk, said Natalia, a 24-year-old mother also queuing outside the refrigerator store. “I used to buy a pack for 69,000 rubles, now they cost 140,000,” or almost half the 343,260-ruble monthly child benefit paid by the government, she said.
“We have become paupers,” said Tatiana, a 70-year-old woman in the line who also declined to give her last name. “We have been squeezed into a corner by this devaluation.”
Belarus’s dollar debt has been buoyed by news of the Russian loan, with the yield on the government’s debt due 2015 dropping four basis points to 9.881 percent by 6:35 p.m. in Minsk, the lowest since March 14. Dollar-denominated notes due 2018 yielded 10.38 percent, down six basis points.
The country has raised its refinancing rate twice since April 20 to 14 percent, the highest in Europe. The central bank also stopped selling foreign currency out of its reserves in March and will continue to stay out of currency markets, spokesman Anatoly Drozdov said by phone in Minsk yesterday.
...And following that, complete socio-economic collapse
Unless Belarus heeds Russia’s call for mass privatization of state assets, it is headed for “hyperinflation, massive un- and under-employment, and a shutdown of production,” VTB’s Moiseev said. The ruble will slide to 10,000 per dollar, he added.
Unemployment was 0.7 percent in December, according to government data. Inflation accelerated to 14 percent in March, the fastest since April 2009 and more than neighboring Russia’s 9.6 percent in April. Imports into Belarus exceeded exports by $7.3 billion at the end of 2009, according to the latest annual data available.
Russian media are creating a “flurry” of speculation about the nation’s asset sales so they can “make good at our expense,” Lukashenko said today in Astana, the capital of Kazakhstan, according to comments reported by state news agency Belta. “But we will not throw anything to anybody for nothing.”
Note the parallels to Greece, which would follow the same fate if it were to make the choice of returning to the drachma.
Alas, there is nothing left to add: this is the future, and it is coming to a developed country near you.
Wait! Theoretically, Belarus should have been going through DEFLATION (because of all that unpayable debt), right?
Good thing their situation will never happen here!
"Believe me when I say that I feel like a dick sometimes laying it on thick the way I do (and with the tones that don't carry across the cyberpage as well as they would if I were just having a straight out conversation with someone.."
Probably are a dick all the time.
Don't Worry guys...
"Google Wallet" is coming to a store near you...
If Apple can come out with an "app" that can cause a 'gasm, I'll probably have to buy that stock finally.
@Anon (12:31)
Yeah... You're probably right... I guess I am a dick all the time...
& why???
Because I question things and come up with my own POV based on my interpretation of the logic... Oftentimes that doesn't square with the opinion of others...
And people don't like when you don't agree with them...
Hell, I've even heard of entire blogs full of people that if you don't agree with them, they hunt down your IP number and ban you for life...
Which basically forces me into just being a dick all the time instead of fairying around and playing grab ass all day...
Andy,
Haven't you held an iphone in your hands? No app needed. If touching one doesn't give you the 'gasm, you just don't get it.
I've been holding an IPHONE for the last 10 minutes....nothing's happening.
David Einhorn buying a piece of the Mets?!
Thot he was smart....
square...
Maybe if I owned more Apple products I'd start getting younger, party more often, become more liberal...maybe loosen up a bit more.
"Demographics show that Apple Users...."
"Demographics show that Apple Users...."
I wouldn't want any part of a club that would have me as a member...
"Demographics show that Apple Users...."
...who have been using them for 24 years...can still get turned down by woman with moustaches today.
I thought Stevie Cohen was getting that piece of the Mets,.....hedgie war
CV,
had to go for a few hours for mtg.
it's fine to ask the question, it's probably not fine to compare Belarus to the US but who am I to stop you.
I never said anything about asking a question, I simply questioned everyone's foregone conclusion about what is going to happen to treasuries when the Fed ends QE2, you are indicating above that without QE2 bond yields would be much higher, I disagree because it denies what's actually happened, doesn't mean it will happen again, but you have to question if saying such things about the end of QE2 is even logical.
and dude, please, $100 billion is not a lot of money considering there is 1 quadrillion at minimum in derivatives outstanding, it just isn't.
I'll go out on a twig and state that you see stocks go down and give even a whiff of trouble, perhaps another mini flash crash, and 100 billion will be scooped up before you can blink, perhaps listen to Bill Gross who says in so many words he buy treasuries right away under the right conditions, he didn't say at the right yield, he said in the right conditions.
Maybe ask yourself another question, who keeps buying 90 day bills at 0?, there's a reason money will finds a home in these places.
I think you and all the other inflationistas might have to scratch your head about the Fed's abilities today. I mean look, the Fed's path since last August has been CLEARLY an attempt to ignite inflation, just not the type you and so many other people are looking for which is all about prices. The feds could give a shit about PRICE, it's credit that needs to expand and sorry, but student loans can't go to infinity.
I'll maintain forever that debt economies eventually have limits, ours was reached in 2007 when total money and credit expand back above those levels I'll grant you that the Fed has won.
"everyone's foregone conclusion about what is going to happen to treasuries when the Fed ends QE2, you are indicating above that without QE2 bond yields would be much higher"
Everyone's foregone conclusion IS NOT CV's foregone conclusion...
There is s subtle difference which admittedly, I probably didn't articulate correctly...
---
My premise ISN'T that QE is going to stop and then yields are going to explode... You're right in saying that that is MOST PEOPLES foregone conclusion, so you tend to group me with them (simply because I put "QE" & "yields" in the same sentence)...
Instead, my premise is that we won't even ever know because we won't get that far...
I'll go out on the same twig with you and say "see stocks go down and give even a whiff of trouble, perhaps another mini flash crash, and 100 billion will be scooped up before you can blink"
What my premise is that that will bring on QE3... & all QE is anyway is a convenient excuse to:
- paper over bad debts
- allow the government to keep raising the debt ceiling
- pay bankers bonuses
- keep the political campaign donations coming...
Oh, that... & moving around a little here and there to do some speculating in thin commodity markets...
Bottom line is, the debt is getting bigger (now that we've found out we can socialize it without protest)...
When there are no more debt ceiling raises & no more QE's, I'll get on board the deflation train... Until then, all that debt is still alive and growing because nobody wants to take a haircut on it...
I'll give to Big Ben....
in the last few years he did more dramatic things than I would have imagined. the who monetizing the debt and taking down the crap assets from banks was something that I wouldn't have thot they'd do ... they got pretty radical.
It feels like an economy that will continue to see 'drags' on things like housing/real estate but but pockets of 'liquidity pressures' when the excess money sloshes around.
I suppose it's those conditions that will create the 20 year triangle that began in 2000....
Just a 'perpetual' push/pull until we get enough debt destroyed and get some hyper-inflation in 2020. ha.
One thing's for sure, though....Goldman Sachs is to blame everything.
Just ask Matt Taibbi.
CV,
I can only respond to what you write, this is right up top, exactly what you said:
"Where are the buyers of $100 billion a month of issuance (and perhaps increasing when [yes - I said "when"] the debt ceiling gets raised)...
10yy is 3% because of Fed intervention... Period...
Now... I'll agree with you that if the Fed removes itself from the picture, and we get TRUE DISCOVERY of bond yields, then we're more likely to see double digit yields..."
I'm not sure how else to interpret though I see now you were really trying to say something else....ok.
also, total debt is not growing since 2007 and I'd dare say the debt ceiling increase is totally irrelevant, it's simply a political talking point that most people are mistaking as a market game changer
Maybe 1 person will be interested, in re: AndyT's 3:06
This is from page 103 of the original CTC book from bobby P
"If banks and the Treasury were to become strapped for cash in a monetary crisis, policies could change. The unecumbered production of banknotes could become deliberate Fed or government policy, as we have seen happen in other countries throughout history. At this point (remember this is 2002) there is no inidicationo that the Fed has entertained any such policy. Nevertheless, Chpts 13 and 22 address this possibility."
I certainly was not wise enough to foresee stuff like this in 2002, but Prechter did, if anyone cares to read that book, chapters 13 and 22, this isn't a shock whats going on or what Beard has done, it was forecast by someone.
I'll continue to maintain that his simple CTC book has been about the best monetary survival guide for the average investor over the last decade, even came complete with advice to buy some physical metals, where to store it, etc.
Also, Andy, when in doubt, blame those EVIL KOCHS!
Well then we see it different...
I think Andy summed it up fairly well...
Just a 'perpetual' push/pull until we get enough debt destroyed
---
Key to that being "until we get enough debt destroyed"... It's NOT been destroyed... The toxic stuff was socialized, and/or put on the Fed's expanding balance sheet...
There it will stay in the hopes that it'll find a market some day (which they'll try to jumpstart periodically but have failed thus far)...
But because of this whole fiasco, a shift has taken place whereby people basically just behave in a way that the government will have to take care of them...
The Treasury will continue to have to issue new debt (and that will most likely increase, not decrease)...
The Fed will "monetize" (because there will be insufficient buyers), and the currency will be debased (as it has since 1913)...
The Fed doesn't care if it eventually loses reserve status of the currency... As long as it has the US Government on the hook for interest payments, they can expect the government to tax it out of the citizens...
All the while, the excess cash floating around can be used to buy up whatever assets will be needed on the other side... In the process, they will do everything in their power to keep the spot prices of those assets from exploding, and use propaganda to keep people believing those real assets are risky & volatile, and it's the debasing currency IOU's (good for a claim on the contents of an empty vault) that you really need to cherish...
Yeah,
Those evil Kochs....
Funny stuff that video at Barry's "alt universe"....http://bigpicture.posterous.com/about-those-koch-brothers
Barry, the "Libertarian," making fun of the MOST Libertarian guys in America.
Interesting guy that Barry.
AT,
Not sure if you trolled around there but not far past that moronic video you'll see his NCAA like brackets for those silly republicans trying to be president
Libertarians are placed in the "Wacko" division on those brackets, Ron Paul among them
alright, last comment on this today
CV,
you can't have it all ways around, if we lost reserve currency status there sure as shit isn't going to be "excess cash floating around"
dude, a not so large rise in interest payments on our debts from here renders us insolvent
extra cash....come on dude, that's just funny, there is no (cash) money!
Set the phone to vibrate, put it in your pocket, and I'll give you a call.
Watching that Gundlach video he sounds....well, like me, or I sound like him more like it. I share pretty much all his views.
however
I don't manage 10 billion.....doh!
dude had 45 people quit a fund just to follow him around before he even had a plan for what he was going to do
tis better to be the tail of a lion, than the head of a fox
Wheat, Corn, Rice, Soybeans...
Looks to me like a bunch of things are awaiting to break out to the upside of triangles that have been in place for quite awhile...
So instead of keeping stacks of $100 bills in the safe... One might think it a good idea to buy a couple of 50 pound bags of some of that stuff and store it in a cool, dry, dark place...
My mind keeps going back to the Belarus woman and the fact that NOW half her monthly government subsidy for childcare gets eaten away by the recent hike in diaper prices...
My first two thoughts (3 thoughts)...
- If you'd have been like CV and kept tossing your nickles into 5 gallon paint buckets (but then substituted DIAPERS for NICKLES)... You wouldn't be hurting... I wonder if she bought an I-Pod in the past 3 years?... Think what you could 'sell' or exchange those diapers for right now! I made the same comment here on this blog a few months ago about tampons, but let's not go there...
2. WTF? What ever happened to the old way of doing things?... Cotton diapers that after your little shit... Umm SHIT in them... You then washed them and hung them on a line and re-used them... I guess all this means is that Amerikan made 'disposable' IDIOCRACY has, in fact reached Belarus...
3. (bonus) DIAPERS bitchez!
@ben
there is no (cash) money!
Then what is DEBT? I thought you said there was a quadrillion of it (which I don't dispute)...
...on its way to a BRAZILLION!
but couldn't you just have the kid "go outside"
see, magic, no diapers needed
and look, there are leaves everywhere
no TP needed either, or sit in a stream.
also, diapers are transitory, unless you've got a serious problem
Cv,
again, after three years of saying it over and over again, debt is money in our system, you said the phrase "excess cash" thinking you are implying banknotes....there is no excess though nor will there be
debt dwarfs notes, the fed will have to print for years to even get half way
@ you're tottally wrong that there's no (cash) money!
I can prove it...
Chris Rock said it here... This nigga had in his pocket 40 cent... CASH MONEY...
How do you explain that?
Unless it was 8 nickles...
forgot the link...
http://www.youtube.com/watch?v=CXFYn4ZZ2JQ
you said the phrase "excess cash" thinking you are implying banknotes
There you go again 'implying' what I'm saying... It's HARD over the internet... I admit that my fingers can't keep up with my thoughts...
---
No... It's WAY WORSE...
Frankly, I can't begin to sit here and talk about all the things involved in how LIQUIDITY gets injected into the system via a POMO operation...
It all happens lightning fast (and I frankly doubt anybody has any control over it - IN FACT, I'm sure they don't)...
All I know is that it's liquidity (which is the opposite of 'non-liquidity', which usually means default)... And so the liquidity gets levered, and it moves prices around in markets...
But the REAL bottom line is that the "raison d'etre" for that liquidity is so that some debt, somewhere (which has probably already been sliced into a brazillion tranches) DOESN'T get destroyed...
Bankers playing a FIAT game in a FIAT regime have only one purpose... To CREATE as much debt as possible... Now it's their 'wet dream' that they've gotten GOVERNMENTS to be on the hook for it (assuming they think the governments will eventually be able to create policy to incrementally TAX it out of the citizens)...
Cv,
enough with the "there you again" bs
it was not me that had to re-explain several of my posts today, when someone talks about excess reseves never once have I heard them saying it in reference to credit/debt.
same with your comments on QE2 ending and bond yields, I didn't imply anything at all, i simply repsonded to a statement that seemed pretty black and white to me and likely would to anyone, no need to "call me out" if you can't get your point across without it being misunderstood
@ben
The "there you go again" part was misinterpreted... It was NOT intended to be hostile... Again, that's why I hate the internet, because if we were sitting down having this conversation, you would have been able to read the NON-HOSTILITY in a millisecond...
I had to make the same comment today from an ANON poster this afternoon who made it a point to underscore that CV was probably a "dick" all of the time... I have a pretty good idea where that ANON came from...
Not YOU!!!
Can you see how difficult this is??? Because if I were sitting here talking to you I wouldn't even have had to type "Not YOU"...
But on the interenet, if you dangle something out there, people grasp it and it becomes subject of mis-interpretation...
Shit... I feel GUILTY having these discussions with you (because you're a PRO & I'm not)... Which means that you're getting PAID for your time & wisdom on these subjects... Instead, I'm just sitting here at my leisure (not that all my time is leisure), making comments & observations...
So... I wasn't calling you out... & I have apologized repeatedly for my fingers not being as fast as my thoughts...
lol, dude, hire a web translator for the blog or just message me with WTF's, LOL's and JBTFD's
and there is no reason to feel guilty, just because I do this type of work doesn't mean I'm any smarter than anyone else or more importantly it doesn't mean I'm right about anything, but I've spent more time on this stuff than most of you, maybe it makes me able to put my own points out there a little eaiser, who knows.
Obviously I get some kick out of taking the other side of whatever the majority starts to say if for no other reason than to get some discussion going, blog is quiet all the time now.
Also, you are such a DICK (j/k)
you know my thoughts on anon comments like that, even if I agreed with it, which I don't, I don't like that crap.
@ben
follow me onto AMEN's CORNER... If you get the time...
I've got a few more things I just picked up on...
Plus, I want to also shift gears and see what you think about Miami Heat...
In short... I think Dallas put a major psy-ops message by taking care of OKC in 5...
Pressure is now shifted...
CV,
just spent an hour in the car for my 10 mile commute, I gotta get to the gym, I'll be back around later tonight.
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