I'm telling you folks, everywhere I go around Europe it seems like party time. Tons of cash floating around. Obvious flaunting of 'wealth' like I haven't seen since Reagan was president. Home prices around the world way beyond what working people can afford. Stock markets hitting highs.
I'd say it's VERY contrarian right now to be pessimistic or cautious.
Which, of course, is why I (and a lot of HP'ers) are exactly that. It feels so right, so damn right, to want to jump in right now and buy stocks, buy some houses in say Romania or Dubai. But it also feels so damn wrong for exactly that reason.
Here's DR's post from December with the 'Crash Alert'. Time will tell, but alas, markets can remain irrational far longer than bears can remain solvent, so no shorting here (yet). Just gold, oil, 5.5% cash and some China for me right now.
Fire away. Get on the record. Crash Alert time or Party On time?
Towers of Money, Towers of Debt
Everywhere we go…everywhere we look…we see towers of money, property, derivatives, debt and credit. Towers in the stock market. Towers in the housing market. Towers stacked upon towers.
So today, we take the unprecedented step of issuing a “Crash Alert.” Not that we have any special information or insight on the subject. We are just looking out the window.
Right now, all over the planet, men - that is men and women with money - expect the good times to continue. They’ve watched their property investments soar. They’ve watched their stock market investments reach new, record highs. And they’re sure that central banks have mastered the art of maintaining stability. ‘Things are good,’ they say to themselves, ‘and they’re going to stay that way.’
Right now stocks and property are at record levels all over the world. An investor has to take stock of himself. Should he buy more…or sell? The pundits, commentators, the Cramers and Kudlows, are all positive. In the face of such jolly sentiment, it’s hard for an investor to keep his wits about him. If he can’t count on his natural gloominess to pull him through, he’ll have to think.
And of course, no investor wants to do that.
January 02, 2007
Daily Reckoning issues 'Crash Alert'
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62 comments:
I have a different take. Because it seems so certain that a crash is eminent, that's exactly why one won't happen (for a frustratingly long time). That's just the way markets seem to behave.
Love the line - markets can remain irrational far longer than bears can remain solvent.
Hadent' seen that before, but it's right on. Maybe I should try to study up and become a hockey fan, take my mind off this frustration.
‘Things are good,’ they say to themselves, ‘and they’re going to stay that way.’
----
Nothing stays the same forever.
I am very concerned that the American consumption machine will slow down to the extent that China (the monster of production) will have to make a decision on holding U.S. Treasuries.
China will do what is in "China's best interest" even if it means selling U.S. Treasuries (and buying gold) to reduce exposure to a falling U.S. dollar.
A further slide in the U.S. dollar would result in higher interest rates which will affect ARM mortgages, credit cards etc.
This I believe will be the sign of difficult times for housing and the economy.
I believe this is why gold continues to trade up in anticipation of a huge meltdown in U.S. consumer debt and the U.S. dollar.
If as a result of the above, U.S. reduces interest rates, which I believe will happen in the near term, to try and stimulate the U.S. economy and housing, then the dollar could be in for a huge decrease in value (gold up).
Eventually the only remedy to correct the falling dollar is an increase in interest (discount) rates and to stop the printing presses. This will put another nail in the housing industry but will be necessary.
I am watching the GDP in China which I understand is slowing from 10.5 in 2006 to a projected 9.6 in 2007. I believe 9.6 for 2007 is very optimistic.
hey einstein,
if china stops lending us money we stop buying all their shit. china's economy tanks.
i love watching "on the money" on cnbc. seems every day they have a segment "best of times" on how, right now, it doesn't get much better. so in a way, they're kinda admittting, it only goes down from here.
of course, if i didnt have a brain, after watching that show everyday i'd be trading like crazy
"if china stops lending us money we stop buying all their shit. china's economy tanks"
It would go way beyond a simple economic problem. If China's economy slows too fast, there will be tens of millions of angry, unemployed former farm boys in the streets. They will not leave town and go peacefully back to their rural hovels, no, they'll probably turn their anger at the government and the situation will get ugly in a hurry. Don't forget the Olympic Games are scheduled for Beijing in '08.
The Chinese government will not do anything that intentionally slows their economy, even if it means they have to keep accepting IOUs from Uncle Sam that they know are worthless.
BINGO!!! Finally someone who understand this very simple fact.
OH MY GOD!! THE RETARDS HAVE INFESTED HOUSING PANIC!
"OH MY GOD!! THE RETARDS HAVE INFESTED HOUSING PANIC!
this is their home.. "house of the mentally retarded".
Your fear of what is coming is palpable Realtwhore
DR is a bear site and is always bearish in outlook but it is very entertaining reading and some of the viewpoints are well worth considering. We would be a nation that would be far better off if every high school senior and college student were required to read Empire of Debt.
hey einstein,
if china stops lending us money we stop buying all their shit. china's economy tanks.
I think China will continue to cultivate its domestic market and other foreign markets for its products when US consumption falters. I suspect the central government there would be fearful of mass unemployment among factory workers there.
there are countless countries with 300 million citizens and a per capita income of $35K for china to diversify into...who needs the US as a customer?
Dolt
Anon January 02, 2007 10:25:53 PM:
we would be better off if everyone read ANY book in the usa.
knee slapper 10:36, that witt must be quite charming amongst the other west side assholes like you
B&N had $4.5B in sales last year, borders $3.45B, amazon $3.1B....wonder what they were selling if not books
" west side assholes like you
"
What did we ever do to the people at FFC? :<
FFC?
10:36, I thought that was rather clever.
Curious though what is meant by west side asshole. West side of the globe,country or manhattan?
A crash can never happen. Don't you realize the markets are all rigged. The plunge protection team and FOMC will just buy, buy, buy.
Use any dip as a buying opportunity.
trading crash or the BIG ONE?
A equity market 4 years on the up, 6 consecutive months on the up, slowing economic growth, weak retain sales, DOW transports not confirming the DOW industrials, 20 out of 20 2007 forecasts are for a UP market; VIX repeatedly hitting single digits and staying around 11 for such a longtime.. the list goes on for any contrarian to make an easy call for a trading crash(10% dump ) within 2 months. More than eating my hat, I'll lose money if it doesn't.
The BIG one - I have no idea when its coming. but the endgame is in sight. In aggregate:
We, in the USA(govt+population) owe money on which we have to make capital repayments and interest payments.
Not only we not make capital repayments, we don't earn enough from the borrowing to earn enough to make the FULL interest payments.
We have to borrow extra money to top off that generated money just to make the total interest payment.
And we borrow even more than that, just for consumption.
The end game is when all the money we borrow goes straight towards paying the interest and nothing, nada,zilch, zero for us..
At that point its over. I see calculations that indicate we are 14% down that path, and fully down that path, assuming unchanging interest rates around 2018.
But of course, the additional borrowing won't be at todays rate. As our creditworthiness drops, rates rise, bringing that end-date forward.
Of course who wants to work greater proportions of the money goes out in interest. So theory suggests people work less productively and generate less towards interest repayment.
The list of side-effects like the above is long.. All of them bring that end-date forward.
The "Crash Alert" idea is dead on.
-K
trading crash or the BIG ONE?
A equity market 4 years on the up, 6 consecutive months on the up, slowing economic growth, weak retain sales, DOW transports not confirming the DOW industrials, 20 out of 20 2007 forecasts are for a UP market; VIX repeatedly hitting single digits and staying around 11 for such a longtime.. the list goes on for any contrarian to make an easy call for a trading crash(10% dump ) within 2 months. More than eating my hat, I'll lose money if it doesn't.
The BIG one - I have no idea when its coming. but the endgame is in sight. In aggregate:
We, in the USA(govt+population) owe money on which we have to make capital repayments and interest payments.
Not only we not make capital repayments, we don't earn enough from the borrowing to earn enough to make the FULL interest payments.
We have to borrow extra money to top off that generated money just to make the total interest payment.
And we borrow even more than that, just for consumption.
The end game is when all the money we borrow goes straight towards paying the interest and nothing, nada,zilch, zero for us..
At that point its over. I see calculations that indicate we are 14% down that path, and fully down that path, assuming unchanging interest rates around 2018.
But of course, the additional borrowing won't be at todays rate. As our creditworthiness drops, rates rise, bringing that end-date forward.
Of course who wants to work greater proportions of the money goes out in interest. So theory suggests people work less productively and generate less towards interest repayment.
The list of side-effects like the above is long.. All of them bring that end-date forward.
The "Crash Alert" idea is dead on.
-K
Get this straight porkpie heads --
Crashes are precipitated.
DR is ALWAYS wrong. And they are becoming even more wrong because the chicanery is going global.
The problem with China is China. The purpose of the big trip had nothing at all to do with exchange rates, bond holdings or anything you morons believe. We went there to quietly help them keep from blowing up.Which brings up the next point.
The3 accident is likely to be ex-US. My guess -- somewhere in The City, London.
The Dow does not crash. Ever again. BUT, any given stock has 10% crashes and there were quite a few last year.
The S & P does not crash. Ever again. It is nearly 950 days since 2% down -- and you morons think 10% or so is coming?
Finally, on your beloved PPT. Not once since it was created in 1988, have I ever heard one of you clickers happen on the real truth which is that it is an offensive weapon too - - not just a prop job shop.
Mr. PoPlicki
CHICAGO, Nov. 4.--Selling of wheat, which the trade attributed to Jesse Livermore of New York, was largely responsible for a lower range of values today.
ROBINSON BLAMES THE REPUBLICANS; Charges Hoover, Mellon and Coolidge Fostered Era of Disestrous Speculation.SAYS NONE ACTED ON BREAK"High Priests of Prosperity" atFault in Their Optimistic Statements, Senator Holds. Coolidge's Part in Situation. Puts Blame on Three. Federal Reserve Board Meets.
LONDON LOOKS FOR END OF DRAIN OF ITS FUNDS; Has Suffered for Two Years From Wave of American Speculation, One Newspaper Says.
LIVERMORE HAS BODYGUARD; Wall Street Operator Hires Former Policeman After Threats.
Now that was a crash. I remember it well.
My question -- can any of you tell me what precipitated the break?
Mr. PoPlicki
sk you worry too much man 14% this 10% that, 2018 blah blah blah.
Have some fun. Live a little. Life's too short to worry over what will happen in 11 years. For all you know a meteor could crash on earth in 2016 then won't you feel stupid for worrying over nothing.
Go get high, get laid, do something, stop worrying you'll get wrinkles.
Damn I hate long posts unless there's substance. But honestly, at first I read 12:59:23 post as 'the chemistry is going global'.
Which is indeed why our economies are doing so well 20 years after R. Reagan deregulated and opened trade.
NOBODY (25 years ago) would have thought that chinamen would be working their asses off to provide capitalists shit for almost free. And needing to do it so their political structure would collapse.
So maybe it's the chemistry that went global and not the, chicanery.
Just a thought, I still think everything is going to crash.
www.dieoff.org
"FFC?"
Its the troll board that all the trolls from the F*ckedCompany troll board went off to when Pud pulled the plug.
The tone of the trolls on the last few threads is remarkably similar to the FC/FFC style. Very enjoyable on a sick level.
I keep waiting for someone to tell the renters to "KSFB".
I hate trolls.
can anyone write a sentence without using an acronym? FFC, FB, KSFB...I suppose these are all inside jokes but I'm at a loss
"can anyone write a sentence without using an acronym? FFC, FB, KSFB...I suppose these are all inside jokes but I'm at a loss"
Sorry, I was just trying to avoid the obscenity in KSFB (Kill Yourself and F*?k the Body).
I think FC was F*?kedCompany and I think FFC just added another "F" when the former shut down.
very mature
In one of the smallest, yet most significant stories today, found at
www.jsmineset.com
quote..."the seemingly innocuous announcement that the Euro now has in circulation the same amount of currency value as the US dollar which deflates one of the key reasons the US dollar was a reserve currency in the first place."
The reserve currncy is the one that most people have. There is no law or rule, just the thing that is most universal.
Today the Euro quitely becomes the equal world reserve currency and tomorrow it becomes the dominant currency.
This is strong fundamental news. US$ is history and Euro the new boss.Such trends usually gain momentum and then accelerate.Good news for Gold.
Richard check out this about the Euro. It is out of the frying pan and into the fire for anyone who puts all their faith in the Euro.
460 million members of the EU need many Euros as 300 million Americans....shocking, asbolutely shocking!!!
The fact that the circulation is only as much as the $US tells you how much more the $US is valued in the rest of the world.
think mcfly, think.
what's the circulation of the GBP? What? It's lower than both the EU and USD and yet it's worth almost twice as much as a USD?? How can that possibly be?
think mcfly, think
Pat Robertson has predicted that China will invade the US.
Pat Robertson talks directly to God just as George Bush once did.
God must have cut off George Bush after realized what a loser he is.
Anonymous said...
hey einstein,
if china stops lending us money we stop buying all their shit. china's economy tanks.
Tuesday, January 02, 2007 8:53:15 PM
------------------
never going to happen. Americans do not save. They spend spend spend. Esp on crappy Chinese crap.
"never going to happen. Americans do not save. They spend spend spend. Esp on crappy Chinese crap."
so china really buys our dollars and then gets them right back... no harm done...
CRASH ALERT
According to this article the number of national foreclosures increased 4% from OCT 2006 to NOV 2006
http://www.mtgfoundation.com/categories/foreclosure/
A 50% annual growth rate in foreclosures is really scary for people whose sole investment is real estate.
Many homebuilder analysts were forecasting 2007 might become worse than 2006 for the homebuilding industry.
Under normal economic conditions subprime loans defaulted at a much higher rate than prime loans and that is where many of the loan delinquencies were occurring.
The US government has been squandering hard earned capital on a worthless war in the Mideast. Tens of thousands of people are dead for crimes they did not commit. There were no WMD's, the hijackers were mainly Saudi, Sadaam was not heard making nuclear threats against his neighbors, nor were there any in print; yet estupido Bush thought there were threats of mass destruction occuring. Half a trillion dollar folly. Halliburton was laughing all the way to the bank.
No Housing Bubble.
US Dollar will soon be worth 50% less so your house will also be worth 50% less.
Infration has been covered up by the Bush administration to protect you Americans from knowing to much.
Just bought a bottle of wine in Italy, cost only 3.5 million lira.
I don't know why anyone would bother buying stocks. There are so many factors that make up a stock price that. Just being a good, profitable company doesn't make the stock price rise. You have to take into account all the big investor sentiment. I don't know why anyone bothers when there are simple commodity ETFs available that are much easier to predict. The price of gold (GLD) silver (SLV) and crude oil (USO) have many fewer factors to try and predict. Same with other commodities. Screw stocks, I'm sticking with the simplest game around now that it's apparent that the falling dollar will cause commodity prices to rise willy nilly.
>Pat Robertson has predicted that >China will invade the US.
If you are going to quote someone, please give a link where you saw this. For all I know this could be complete bullshit.
Please don't mess with Cramer. He's just a man.
By the power of the Holy Spirit, he was born of CNBC, and became man. For our sake he was crucified under Alan Greenspan, he suffered, died and was buried. On the third year he rose again in fullfillment of the the TV Guide.
He will come again every weekday at 3pm, to judge the stocks and the bonds, and his kingdom will have no end.
Unfortunately, the humans that care are roughly evenly divided as to the outcome of the housing crash. Therefore, the market cannot fake anyone out. 50% will be right.
"very mature"
Yep, and they are all over this board employing their thoughtful debating tactics
I have no sympathy for the rich, the powerful and the famous. They more than anyone else have the power to control their own destiny. If they end up dead or mutilated, it's their own fault.
Just bought a bottle of wine in Italy, cost only 3.5 million lira.
++++++++++++
HUH??? And where was that???
Italy has been using the Euro as currency for YEARS!!! LMAO!
Richard check out this about the Euro. It is out of the frying pan and into the fire for anyone who puts all their faith in the Euro.
+++++
Oh, wow! Thanks for the link. I have a feeling that if Germany and France are readying new supplies of their old currencies, we might as well kiss the Euro goodbye....
MLN Video - Pack your $hit up!
http://bakersfieldbubble.blogspot.com
....just remember, it's different this time!
I have to comment that I first linked to Daily Reckoning about 5 years ago and the "sky was falling" then also. That's their sizzle to get subscribers.
My econ summary is this: The areas with the highest % of exotic mortgages/resets get killed the most, homes priced not far above local rental equivalents make it through fine, high end houses are in price decline danger due to lack of quantity of high-paying jobs being created and overbuilding.
The Central Banks' out is monetizing debt and money creation at 15-20% per year for next few years, allow some inflation that is not perceived to be too dangerous by the masses, let gold and oil et. al run 15-20% or so per year ($780 gold, $75 oil in 2007) and inflate our way out of the Debt Problem (sorry Asia).
IMHO only, now I need to get to work...
On another thread there was some shmuck saying how he makes $140K a year. This same shmuck was complaining that the country was going down the shitter.
Now here is another moron who probably makes 6 figures and he is complaining about the lack of high paying jobs.
Regrets not buying in 2001
Especially angry at owners
No yard in his future
Troubled by nigger neighbors
Eager to buy but cant afford
Rants incoherently about GD2012
come on renters, just you and me here, nobody else...you can admit that you secretly wish you owned a nice home isntead of the 1 bed / 1 bath rental.
I know you are keeping up the bravado for your fellow renters, but deep down it hurts.
Hurts to know you will never own a home. Hurts to know your nigger neighbors and illegals will be sharing a wall with you for the rest of your life.
Hurts to know that no woma will look at you when she finds out where you live.
So come on renter, just let it all out, it'll make you feel so much better, I promise.
HPers begin the spin.......NOW!!
NEW YORK (Reuters) - The decline in the Manhattan apartment market seems to have been over in a New York minute in contrast to the sluggish U.S. housing market, according to an influential property report released on Wednesday.
In the fourth-quarter, the median price of a home in Manhattan rose 5.1 over the year-ago period, according to the report, the Prudential Douglas Elliman Manhattan Market Overview.
The number of sales during the fourth-quarter rose 15.5 percent to 2,441 from the prior quarter and 55 percent from the year ago quarter. The inventory of homes shrunk 22.2 percent from the third quarter to 5,934 and 0.5 percent from the year ago quarter.
Had some friends leased a BMW last weekend in Northern Virginia. They said the dealership was crazy, TONS of people taking cars off the lot. He was laughing at this "slowdown" tone in the news about people not spending money or worried.
Similar story.
I was at a Mercedes dealership in Orange County the Saturday after Thanksgiving. I couldn't believe it but I actually had to wait for a salesman to talk to me. It was so busy that there were more customers than salespeople, I've never seen this before and I go test drive cars all the time.
come on renters, just you and me here, nobody else...you can admit that you secretly wish you owned a nice home isntead of the 1 bed / 1 bath rental.
I know you are keeping up the bravado for your fellow renters, but deep down it hurts.
Hurts to know you will never own a home. Hurts to know your nigger neighbors and illegals will be sharing a wall with you for the rest of your life.
-----------
We did own a house 2 years ago, but sold to re-locate. I am frustrated that we cant buy in this market...scratch that-actually, we can afford to buy one, but it will only be a smallish, standard living type home... or we could go ALL OUT and buy a 550K with an option arm mortgage and hope for the best!
Here in Reno, prices are beginning to drop, some already lost 50K.
Give me a good reason why we should "buy now" other than helping a realtor survive.
True story:
Just a few days ago, I was witness to a conversation between a reator & her client.
The essense of the meeting was the following:
A business owner had moved out of his 2003 built home into a new home in 2005. He had put down $50K and bought in for $260K from a home builder. Current loan payoff is just over $200K.
He was renting it out for $1200/mo the max the rental market would support; but since that would not cover the MTG pmt over $2K/month... he wants to sell now.
The realtor-lady hit him squarly between the eyes with the BAD NEWS.
She showed him the COMPS all 3-6 months old showing that his property in TOP-CONDITION would only fetch $207K - $214K now; IF HE COULD FIND A BUYER. But she said that nothing is moving at today's COMP prices... and if he really wanted to sell NOW; he could list at $209K; and be prepared to accept $199K offer.
She then listed all his closing costs including her LISTING fee and said they would either need to arrange for a SHORT sale with the BANK [she seemed to be pushing this] or he would have to come to the closing with $15K to $25K to cover the short.
The man looked at her and said, "I own a business and have assets, its time to STOP THE BLEEDING, dump this sucker now."
The realtor shot back, "Ohh, we don't call it dumping, we call it a sale."
He said, "I'm taking a $60K to $80K loss on this property... If you want this listing, we're DUMPING IT!"
The realtor was writing up a listing contract; as the man paid me for work on the vacant property (requried due to the fact that his prior tenant just moved out) and I left.
i must agree w blggr who says dont take it soooo serious go get laid get high or somthing .lots of great minds here thats why im here. mba 51 seen it worse way worse.
agree w poster go get laid get high somthing . dont take it all soooo serious. mba 51 seen worse waay worse
why so much anger here?
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