Hva skjer i 2010?

[blaavass]

Litt om hva jeg tror skjer i 2010. Hva tror dere?

Vi har nå hatt et flott bear market rally. Jeg vil tro at pengene som har vært pumpet inn i amerikansk økonomi har i stor grad bidratt til å pumpe opp børsene både i USA, men ikke minst i verden generelt. Ekstremt lave renter i kombinasjon med forventninger om at dollar skal svekke seg, har gjort carry-trade svært lønnsomt fra USA.

I 2010 vil jeg tro at deleveraging igjen vil komme i skuddet når oppgangen mister steam av seg selv fordi det ikke finnes flere kjøpere (oppgangen er kommet på forholdsvis lavt volum) eller at statlige stimulanser blir redusert pga stor offentlig gjeld. Deleveraging vil kunne presse opp rentene pga kredittrisiko og styrke dollaren midlertidig, noe som gjør at carry-trade fra USA blir mindre lønnsomt. I sum mener jeg det er stor fare for sterk nedgang på børsene i løpet av 2010.

Med mange land på randen av konkurs, så vil jeg tro at det vil komme uro i valutamarkeder og man vil få land som går konkurs slik Island gjorde med krasj i valuta, høye renter og høy inflasjon. Det vil muligens kunne gi støtte for dollar og Treasury Bonds lengre enn man ellers vil kunne forvente. Dollar styrket seg når Dubai fikk problemer med å betale sin gjeld.

Sentralbanker i hele verden vil forsøke å holde rentene nede så lenge de klarer i og med at jeg tror det vil være mye arbeidledighet og dårlig realøkonomi i lang tid. Først vil økt kredittrisiko kunne dytte opp pengemarkedsrentene, mens sentralbankene vil øke rentene først når inflasjonen tar av for alvor. Dette vi kunne bli tidsmessig veldig forskjellig i fra land til land mht valutakriser. Den norske sentralbanken vil muligens være sen i dette løpet pga relativt sterk økonomi og fare for sterk valuta.

Gull og gullaksjer vil styrke seg i 2010, men kan jo svekke seg midlertidig ved en sell-off. Det kan tenkes at gull svekker seg pga midlertidig sterkere dollar og deleveraging. Gullaksjene kan likevel stige fordi innsatsfaktorer som olje, etc, kan svekke seg mer enn salgsprisen på gull, noe som bedrer marginene.

Ved turbulens i valutamarkeder, vil NOK kunne bli svært sterk, noe som legger press på gullprisen målt i NOK.

Det som jeg tror kommer til å markere spikeren i kista for USA, er når Kina reduserer eller fjerner sitt peg mot dollar. Presset mot dette vil bli raskt sterkere etterhvert som det blir mer og mer tydelig at USA ikke kan betale tilbake gjelden sin med annet enn nytrykte penger. Kina og verden har allerede startet sin diversifisering ut av dollar. Denne prosessen vil aksellerere og da elimineres verktøyene som vedlikeholder peg'et, noe som gjør at peg'et må oppheves. Kina vil nok ønske at denne prosessen skal gå så langsomt som mulig slik at de får mest mulig penger ut av dollar før prosessen virkelig tar fart. Tror det er visse muligheter for at dette kan utsettes til 2011, men det kan selvsagt ikke utelukkes i 2010.

Jeg tror også at fjerning av peg'et vil markere starten på inflasjon i Norge også. Vi har lenge importert deflaterende krefter fra Kina, men fremover vil vi merke inflaterende krefter når valutaen deres styrker seg. Tenk på hvor mye dollaren har svekket seg over mange år i en periode der renminbien burde ha styrket seg mot nesten alle valutaer...

Det er forresten gode muligheter for skikkelig børskrasj i Kina også i 2010, siden de nok har alt for mye kapasitet. Tror ikke det innenlandske konsumet tar seg opp så raskt at det klarer å erstatte USA, etc. Vekst-tallene fra Kina tror jeg ikke er "riktige" per i dag.

De viktigste mulighetene i 2010 slik jeg ser det:
- shorte markedet ved tydelig teknisk brudd ned i hovedindeksen
- gullaksjer
- fastrente på boliglån som langsiktig forsikring, minst 10 år
- plassere langsiktige penger i vekstmarkedsfond dersom det skulle bli en svært sterk krasj der i løpet av året

[blaavass]

Tidligere har Peter Schiff uttalt at det vil bli valutakrise i USA dersom myndighetene ikke endrer kurs.

I videoen under uttaler Schiff at han mener det vil bli valutakrise i dollar allerede i 2010 eller 2011 (4:20).

http://www.youtube.com/watch?v=E0YNCSFzKBY

[blaavass]

Et alternativt scenario for utviklingen fremover vil være om stimulansetiltakene skulle unngå deleveraging, samtidig som en ”orderly decline” av dollar foregår. Det vil bety at verden diversifiserer seg ut av dollar og kjøper gull, aksjer, etc i stedet.

Det blir altså et scenario der USA er baljen som synker og som får alle andre skip til å heve seg. Børsene i andre deler av verden vil i så fall fortsette å stige uten et nytt krasj. Kan det skje? Dersom det skulle skje, så vil det kunne være dumt å ikke være inne i aksjemarkedet utenfor USA.

USA hindrer deleveraging gjennom å i praksis ha nasjonalisert flere store banker. For Fannie og Freddie garanterer staten nå for alle lån og Fannie og Freddie overtar hus og leier dem ut igjen i stedet for å selge dem i markedet. USA hindrer altså deleveraging gjennom zombie banks akkurat slik Japan gjorde det. Kan dette lykkes slik at det etableres en stabil situasjon som unngår videre deleveraging?

Jeg tror ikke den nåværende situasjonen kan være stabil. Det er enorm gjeld i verden, boblen har sprukket og man slipper raskt opp for pust dersom man forsøker å holde den oppblåst. Som det vises i klippet under, så kommer det nye problemer i lånemarkedet når renten på andre prime boliglån starter for fullt å resettes i løpet av 2010 (3:25). Det betyr at deleveraging vil starte opp igjen sannsynligvis en eller annen gang i løpet av 2010. Børsene kan kanskje stige noe mer frem til deleveraging starter opp igjen, men dette kan like godt hende i første halvdel av 2010 som mot slutten av året. Who knows?

http://www.youtube.com/watch?v=TNHbwDtMnuY

Deleveraging vil redusere money supply. Denne kraften vil sannsynligvis være så kraftig at den vil være sterkere enn den pågående diversifisering bort fra dollar og sentralbankens trykking av nye penger. Sannsynligvis vil dollaren altså styrke seg så lenge deleveraging pågår. Samtidig kan man undres på om ikke en deleveraging vil kunne benyttes av markedsaktører til å forsterke sin diversifisering ut av dollar? En fiat valuta kan selvsagt også miste sin verdi rett og slett fordi tilliten er borte, f.eks. dersom USA ikke klarer å betale avdragene på gjelden.

Om man ser tilbake til børskrasjet i 30-årene, så varte andre del av krasjet i et par år, 30 til 32, se link under. Bear market rally varte ca i ett halvt år i 1930, mens vi nå gjennom stimulansepakker og økt statlig gjeld har klart å skape et bear market rally som til nå har vart omtrent ett helt år.

http://www.lowrisk.com/crash/1929crash3.htm

Klarer man å blåse luft inn i den sprukne boblen stort lengre, eller holder myndighetene på å slippe opp for luft?

[blaavass]

Jeg holder altså fast på at det er mest sannsynlig med en ytterligere deleveraging som starter i løpet av 2010. Selv om det flykter penger ut av dollar og inn i andre assets, så klarer jeg ikke å se at andre børser skal kunne unngå å dras kraftig med nedover. Bare den psykologiske erkjennelsen av at USA krasjer med sitt store forbruk vil endre forventningene til selskapers inntjening og derved børskursene i hele verden.

Carry-trades fra USA vil også bli ulønnsomme når valutaen styrker seg og rentene beveger seg oppover pga kredittrisiko.

Under deleveraging vil markedet selge posisjoner, gå cash og nedbetale gjeld. Cash blir altså mer verdt relativt til aksjer, etc. Gull er penger og vil på samme måte bli mer verdt relativt til aksjer, etc, selv om det kan gå noe ned i forhold til cash.

I hovedsak er mine posisjoner cash og gullselskaper gjennom kommende deleveraging i tillegg til mulig shorting dersom tydelige muligheter skulle dukke opp. Gullselskaper vil bli bra selv om gullet skulle synke noe i verdi fordi kostnadene vil synke mer i et slikt scenario. Lavere utbyggingskostnader og billigere energikostnader vil bedre marginen selv om gullprisen ikke stiger. Se link under for utviklingen for gullaksjer i 30-årene.

http://www.gold-eagle.com/editorials/great_crash.html

Det som er snedig med gullselskaper er at lønnsomheten deres vil bli bedre dersom det kommer inflasjon i stedet for deleveraging så lenge realøkonomien er dårlig. At realøkonomien kommer til å være dårlig fremover føler jeg meg rimelig sikker på. Gullprisen vil i så fall stige raskere enn energipriser og andre kostnader, noe som vil bedre marginen.

Etter noen år vil det være aktuelt å selge gullselskapene når disse topper ut etter at børser har bunnet ut. Tekniske topp- og bunnformasjoner blir viktig mht timing. Det er når veksten vender tilbake og energipriser øker kraftigere enn gullprisen at marginbedringen for gullselskaper vil stoppe opp og være fullt priset inn i aksjekurser.

Deretter ser jeg for meg langvarig investering i fond eller ETF for vekstmarkeder, samt ETF for Oslo Børs. I løpet av de kommende årene tror jeg den kinesiske valutaens peg vil opphøre, noe som vil starte en langvarig stigning i deres valuta. Samtidig vil det bli en boom i Asia generelt med de effektene det vil ha på råvarer og Oslo Børs. Muligens vil asiatiske børser i løpet av dette tiåret utvikle seg til en boble som man må selge seg ut av, men det er et stykke frem dit.

Noen kommentarer?

[blaavass]

Jeg kan jo nevne salgsstrategien min for gullselskapene. For å illustrere vil jeg bruke Fred Olsen Energy som eksempel (FOE), se link til graf under.

Graf for FOE med 150 MA (http://norma.netfonds.no//analysis.php?paper=FOE&exchange=OSE&from=20030101&to=20080101&period=&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14)

Gullselskaper mener jeg nå er i tilsvarende periode som FOE var i 2003 da kursen etablerte seg over 150 MA (Arithmetic moving average). Videre økte FOE-kursen med jevnlige tilbaketrekninger til 150 MA underveis. Dersom kursen stiger mye over 150 MA, så vil gjerne påfølgende tilbaketrekning kunne bryte igjennom 150 MA. Så lenge 150 MA fortsatt er stigende, så er det ikke noe stort problem. Det er når 150 MA samtidig flater ut og evt begynner å peke nedover at det virkelig er skummelt. MA er en indikasjon på trenden.

Etter f.eks. 2 til 3 år vil man kunne observere ett eller flere av følgende salgssignal:
1. Ekstremt sterk stigning sammenlignet med tidligere stigning, dvs. en klimakstopp. Selg når den sterke stigningen ebber ut, typisk langt over 150 MA.
2. Det etableres et horisontalt støttenivå som brytes ned. Hele formasjonen etableres på oversiden av 150 MA. Selg når formasjonen brytes, trenger ikke å vente på at 150 MA brytes.
3. Kursen går over i en konsolideringsfase og 150 MA flater ut, se FOE fra sommeren 2006 til sommeren 2007. Om du ikke har solgt allerede, så for all del selg når kursen deretter ramler gjennom 150 MA slik det skjedde i FOE sommeren 2007.

[blaavass]

Her er en kronikk jeg skrev i slutten av mars 2009 på bloggen www.kronikker.org, men bloggen er senere blitt nedlagt.

Tittel: Festen er slutt og gjeld må nedbetales
Se for deg en person som har brukt opp sine sparepenger på fest og moro. Vedkommende burde redusere festingen og spare mer, men klarer å holde festen gående ved hjelp av forbrukslån. Når forbrukslånet er oppbrukt, så klarer vedkommende å låne mer gjennom å trekke på sine kredittkort. Deler av den økte kreditten brukes til å betale avdrag på gammel gjeld. Vedkommende klarer å holde festen gående ennå litt til gjennom å låne penger av venner.

Når det ikke er noen som lenger er villig til å låne ut mer penger, så er gjelden faktisk så stor at vedkommende ikke er i stand til å betjene månedlige avdrag basert på månedlig lønn. Alle skjønner at denne personen vil få det tøft, forbruket må reduseres og penger må gå til nedbetaling av gjeld. Det vil ta lang tid å komme seg ovenpå igjen.

Hvorfor er det noe annerledes for nasjoner? Hvorfor er det så mange som fortsatt lever i håpet om at denne resesjonen snart er over?

• Verdens største økonomi må redusere sitt forbruk og nedbetale gjeld
Festen i verdens største økonomi, USA, er definitivt over og deres långivere vil måtte ta store tap. Når USA og andre land må redusere sitt forbruk og i stedet nedbetale gjeld, vil verden merke at det er store overkapasiteter som må reduseres.

Jeg mener USA i praksis er på vei mot konkurs og at markedet nå tvinger amerikanerne til å redusere forbruket og øke sparingen. Først vil verden slutte å låne USA mer penger, men den amerikanske sentralbanken kommer nok til å kjøpe statsobligasjonene i stedet (dvs å trykke nye penger eller ”quantitative easing”) for å finansiere statens budsjetter og for å holde rentene og renteutgiftene på statsobligasjonene nede. Dette vil etter hvert føre til valutakrise med tilhørende sterkt fall i verdien på dollar og til slutt starte sterk inflasjon med tilhørende høye renter. Resultatet er at verdens største økonomi sannsynligvis skal igjennom en langvarig depresjon med de konsekvenser det vil ha for resten av verden.

I de kommende årene vil svært mange amerikanere bli ruinert gjennom massiv arbeidsledighet, store tap på boligverdier og verdipapirer, samt store tap på pensjonssparing. Pga svak dollar vil de oppleve sterk prisøkning på forbruksvarer, noe som ytterligere vil redusere forbruket deres.

USA vil måtte begynne tvungen sparing gjennom å underforbruke og å spare penger. De må gå den lange veien med å bygge opp igjen industrier som kan produsere reelle produkter for eksport som bytte for import. Det vil ta tiår for landet å gå igjennom denne prosessen.

• Pengetrykking gjør pengene mindre verdt
Det som skiller nasjoner fra enkeltpersoner, er at nasjoner kan trykke nye penger og nedbetale gjeld med disse. Det betyr i så fall at långivere må ta store tap i og med at man får betaling i penger som blir mindre og mindre verdt.

Kina og resten av verden som har lånt penger til USA, vil oppleve store tap når de mottar betaling i dollar med sterkt redusert verdi. De som har dollar på bankkonto, vil oppleve at man ikke får kjøpt så mye for disse pengene lenger. USA vil merke at dollar strømmer inn i landet i bytte mot eierskap og reelle verdier som strømmer ut av landet.

Når USA, som har verdens reservevaluta, trykker nye penger til å nedbetale gjeld, følger mange land etter fordi en sterk valuta vil gi problemer med eksporten. Det betyr at det blir en valutakrig der nasjoner konkurrerer om å svekke sin valuta gjennom økt pengemengde og unaturlig sterk reduksjon av renter. Når vi kommer ut på andre siden av denne gjeldsreduksjonen, vil vi sannsynligvis merke effektene av pengetrykkingen for fullt, dvs. sterk inflasjon.

• Forvaltningen av Oljefondet
Så vidt jeg har oppfattet, er dagens forvaltning av oljefondet basert på å se i bakspeilet og på hva som har fungert bra i ca de siste hundre år. Jeg vil hevde at det kan være en dårlig ledesnor i disse tider. Historiekunnskap er viktig for å forstå fremtiden, men dersom man bare kunne kopiere fortiden, så ville det vært mange flere rike personer i verden. Jeg vil hevde at det vi nå opplever ikke er en vanlig resesjon der aksjemarkedet korrigerer 50% for deretter å nå ny all-time-high innen ett år eller to år etter korreksjonen.

Akkurat nå er aksjemarkeder sannsynligvis oversolgt og man vil kunne få et bear market rally før det fortsetter lavere. Mange vil nok se på rallyet som en bekreftelse på at stimulansene hjelper og at vi sannsynligvis har passert bunnen. Man vil for all del ikke miste oppgangen...

Øystein Stray Spetalen har uttalt at ”Den som ikke åpner øya i aksjemarkedet må åpne lommeboka”. Fra mitt ståsted ser det ut som at Oljefondet i lag med de fleste analytikere og økonomer ennå ikke har åpnet øynene for hvor alvorlig og langvarig denne krisen sannsynligvis blir for verden. Det kan altså bli en historisk thriller fremover å observere hvor mye penger som skal renne ut av vår felles lommebok i de kommende årene, både i nominelle- og reelle verdier.

Kanskje det er på overtid at forvaltningen av Oljefondet skifter fokus fra ”hvordan oppnå størst mulig avkastning” til ”hvordan tape minst mulig penger”?

[blaavass]

Om man er åpen for muligheten av at markedet vil oppføre seg slik at det blir størst mulig destruksjon av verdier for massene, så kan det være interessant å spekulere i hvordan et slik scenario vil være.

Her er et forslag:
Først et høyt aksjemarked med lav P/E pga eksepsjonelt god inntjening som gjør at markedet ikke virker overvurdert. Deretter et brått krasj som gjør at man ikke rekker å selge seg ut før det bunner ut. Deretter et kraftig og forholdsvis langvarig bear market rally som gjør at flere og flere tror bunnen er passert og kjøper seg inn i markedet, de fleste forholdsvis høyt. Deretter et langt og seigt fall som gjør at man ikke blir skremt ut av markedet, men følger med helt ned. På bunnen gir man opp og kjøper obligasjoner i stedet for aksjer. Deretter en lang og bratt stigning sammen med sterk inflasjon. Mange mister oppgangen fordi de er desillusjonert mht aksjer og ser at realøkonomien er dårlig, spesielt i vestlige land. Samtidig taper man mye på obligasjonene pga sterk inflasjon og renteoppgang:

Denne artikkelen kan muligens tolkes som støtte for et slik scenario:
http://www.storebrand.no/site/stb.nsf/Pages/allekjoeperaksjefond.html

[blaavass]

Her er en liten teknisk betraktning.

Dollar index’en har nå brutt opp gjennom 50 MA, noe den også gjorde i oktober 2008.
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax

Det er også interessant at index'en faktisk har brutt opp gjennom 200 MA.
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax&w=1&t=l&a=200

Når dollaren svekker seg, så betyr det at penger strømmer fra cash til assets og børser stiger. Når dollaren styrker seg, så betyr det at penger strømmer ut av assets og tilbake til cash og børser synker. Dette er i hvert fall gyldig for litt sterkere bevegelser.

For S&P500 så etablerte det seg en omvendt-hode-skuler i løpet av første halvår i 2009.
http://quotes.ino.com/chart/?s=CME_INX&v=dmax

I midten av juli 2009 fikk formasjonen brudd opp gjennom halslinjen ved ca 950. Bunnen i formasjonen var på ca 680. Det betyr at høyden på formasjonen var ca 270. Dersom man antar symmetri rundt halslinjen, så vil formasjonen kunne indikere stigning til 950 + 270 = 1220.

S&P500 er nå nesten i 1140, noe som betyr at det ikke er så mye igjen til 1220. Sånn sett er det mulig at bear market rally’et ikke har så veldig mye steam igjen, men kanskje nok til ett rykk til? Det blir interessant om det etterhvert begynner å danne seg en mulig toppformasjon. Om det deretter dannes et brudd ned gjennom en halslinje, så burde det kunne bli en mulighet for å shorte.

[blaavass]

Her kan dere se graf som viser hvordan kursutviklingen var for gullselskapet Homestake Mining ifb.m. depresjonen rundt 1930 i USA. Dere vil se at stigningen begynte for alvor etter første bear market rally etter toppen for Dow Jones i 1929.

http://www.longwavegroup.com/market/charts/_pdf/Homestake_Djia.pdf

Det er forresten mye interessant stoff på Longwave Group sin hjemmeside med fokus på Kondratieff bølger.

http://www.longwavegroup.com/

[blaavass]

Her er et lite tankespinn.

Hvis du hadde vært Kina (eller et annet land) og hadde innsett at dollar beholdningen du sitter på kommer til å bli mye mindre verdt, hva ville du gjort?


Ville du redusert dollar beholdningen eller unngått videre økning av den gjennom å:
1. Kjøpe mest mulig gull?
2. Kjøpe mest mulig råvarer og rettigheter til råvareforsyninger, samt utenlandske selskaper?
3. La egen industri produsere for lager det de ikke klarer å selge, samt bygge ut landets infrastruktur? Dvs importere mest mulig, selv om det ikke blir eksportert igjen.

Ville du prøve å utsette kollapset i dollaren så lenge som mulig slik at du får tid til flytte mest mulig penger over i andre assets? Ville du også gradvis vekte beholdningen av statsobligasjoner mot de med kort varighet og gradvis redusert mengde kjøp?

Ville du samtidig uttalt offisielt at peg’et mot dollar vil bli opprettholdt, samt at fokuset er å opprettholde vekst og eksport-nivå? Opprettholdelsen av både peg’et og eksporten vil være med på å støtte dollaren fordi det signaliserer fortsatt sterkt kjøp av amerikanske statsobligasjoner som opprettholder peg’et og i tillegg finansierer amerikanernes kjøp av kinesiske varer. I tillegg vil det holde flere kinesere i arbeid, noe som motvirker sosial uro.

http://www.dn.no/forsiden/article1808324.ece


Hvordan ville effekten av disse tre tiltakene komme til syne?
- økende kinesisk gullbeholdning
- sterkere etterspørsel og høyere råvarepriser enn hva det ellers ville vært, spesielt for de råvarene som er egnet til lagring (olje, industri metaller)
- ekstra støtte for verdens børser ved at Kina tilfører likviditet gjennom å kjøpe utenlandske selskaper og generelt øke sin import.
- redusert kinesisk handelsbalanse med utlandet fordi man kjøper mye fra utlandet som ikke nødvendigvis blir eksportert igjen, men legges i stedet på lager eller blir brukt til infrastrukturprosjekter internt i Kina
- etter hvert økende renter på amerikanske statsobligasjoner med lang varighet

http://www.grunder.no/naringsliv/20100111/kinas-overskudd-stuper/

Selv om Kina forsøker å utføre sine tiltak i det skjulte og gi verden inntrykk av det motsatte, så vil jo tiltakene deres etter hvert gi uunngåelige negative effekter for dollar’en:
- at dollar beholdningen reduseres, betyr at flere dollar’er kommer i aktivt omløp i økonomien og bidrar til økte priser i dollar som jo er det samme som at dollar’en blir mindre verdt.
- redusert kjøp av amerikanske statsobligasjoner og vekting mot obligasjoner med kortere varighet gir økt fare for at USA ikke klarer å betjene gjeld og renter, noe som vil gi valuta krise for dollar. Evt vil det gi økt fare for at USA trykker penger for å betale gjeld og økte renter, noe som reduserer dollarens verdi og i verste fall gir valutakrise.
- redusert kjøp av amerikanske statsobligasjoner gir mindre støtte til peg’et og spekulasjon i valutamarkedet vil kunne bygge seg opp og bryte det. Om peg’et brytes, så mister dollar’en støtten fra kinesisk økonomi, noe som reduserer dollarens verdi.

Hva skjer når lagre er fulle i Kina og veksten deres reduseres med lavere etterspørsel etter råvarer? Hva skjer når det blir tydelig at Kina (og andre land) reduserer sine kjøp av amerikanske statsobligasjoner? Kan dette skje i 2010? Kan det utsettes så mye lengre enn 2010?


At den kinesiske befolkningen kjøper gull, har samme effekt som at staten kjøper gull...
http://seekingalpha.com/article/159962-china-urges-citizens-to-buy-gold-and-silver

[Cauldron2]

China Yuan Float Could Come Soon: Jim Rogers

http://www.cnbc.com/id/33115152

Jim Rogers tror pegget til dollar kan fjernes allerede i 2010 - 2011.

[blaavass]

Jeg vil anbefale Niall Ferguson’s bok ”The Ascent of Money”. Den ble først utgitt i hardback i 2008 og så paperback i 2009 med litt oppdateringer.

Boken omtaler:
- penger og kreditt
- obligasjonsmarkedet
- aksjemarkedet
- forsikring
- eiendomsmarked
- internasjonalt finansmarked

Boken forklarer hvordan hvert av markedene oppsto og utviklet seg historisk med den hensikt å gjøre det lettere å forstå hvordan de fungerer og hvilken rolle de spiller i nåtidens situasjon.

Ferguson omtaler også avhengigheten mellom Kina og USA. Han bruker analogen et ekteskap som han kaller "Chimerica" der den ene parten er nøysom og sparer (Kina), mens den andre parten setter pengene over styr på gambling og høyt forbruk (USA). Det vanskelige spørsmålet er om det blir skilsmisse av det? ”…until DEBT do us apart.”

Niall Ferguson’s hjemmeside:
http://www.niallferguson.com/site/FERG/Templates/Home.aspx?pageid=1


Dokumentar i flere deler basert på boken:
Del 1 - Dreams of Avarice (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#)
Del 2 - Human Bondage (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=-9071264308290415949)
Del 3 - Blowing Bubbles (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=-2329733959986813272)
Del 4 - Risky Business (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=-6158741613760398167)
Del 5 - Safe as Houses (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=26961947715941856 97)
Del 6 - Chimerica (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=-635091739003581971)


Intervju med Niall Ferguson:
http://www.youtube.com/watch?v=9cIeQp2zzhY&feature=PlayList&p=2FDF0339065739B8&index=1

[blaavass]

Kina truer Obama:
http://www.dn.no/forsiden/utenriks/article1830413.ece

I ”The Ascent of Money” trekker Niall Ferguson en interessant parallell mellom dagens USA-Kina forhold og England-Tyskland i forkant av første verdenskrig. Se også (43:40) i følgende del av Fergusons dokumentar.

http://www.220.ro/oMTFimNoNG/Ascent-Of-Money-Part-6

I forkant av første verdenskrig virket verden veldig trygg og harmonisk med en sterk globalisering av finansmarkedene. England var verdens finanssenter, mens Tyskland var Europas mest dynamiske industrielle økonomi. Det var et forhold mellom disse to landene som balanserte mellom symbiose og rivalisering, men som altså endte i første verdenskrig i 1914 og et tilbakeslag for globalisering som varte til ut på 60-tallet(!).

Når et nytt land stiger opp som stormakt og krever sin plass internasjonalt, er det klassisk at det oppstår spenninger i forhold til andre land og muligens krig. Mellom USA og Kina finnes det flere mulige spenningsfelt som Taiwan, Tibet, tilgang til råvare ressurser (for eksempel i Afrika og Midt-Østen), valuta-peg, imperialisme og amerikansk gjeld.

Så vidt jeg forstår, så er oppfatningen i Kina at USA sitt forbruk og gjeld er ute av kontroll. Det kan bli interessant å se om ikke Kina bruker Obamas besøk av Dalai Lama som en anledning til å straffe USA gjennom å redusere sitt kjøp av amerikanske statsobligasjoner. Det kan fremskynde økte renter og/eller valutakrise i USA. I ytterste konsekvens vil det kunne sette i gang en kjedereaksjon av hendelser med store negative effekter på hele verden. Tipper kineserne blir sure dersom USA inflaterer seg ut av gjelden eller default’er på avdragene, osv.

[blaavass]

Det spørs om ikke turbulensen er på vei til å øke i valuta- og obligasjonsmarkedene nå. Når snøballen begynner å rulle, så kan det være vanskelig å hindre den i å rulle fra land til land...

Nedsalg av Portugals statsobligasjoner:
http://www.dn.no/forsiden/utenriks/article1831649.ece

USAs kredittrating under press:
http://www.dn.no/forsiden/utenriks/article1831702.ece

[Cauldron2]

http://www.prisonplanet.com/the-bankruptcy-of-the-united-states-is-now-certain.html

"When governments go bankrupt it’s called “a default.” Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. That’s why the formula is called the Greenspan-Guidotti rule. The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world’s largest money management firm, PIMCO, explains the rule this way: “The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support.”

The principle behind the rule is simple. If you can’t pay off all of your foreign debts in the next 12 months, you’re a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It’s a guaranteed default. The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world’s largest holder). That’s 16,267,000 pounds. At current dollar values, it’s worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that’s roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether… that’s around $500 billion of reserves. Our short-term foreign debts are far bigger.

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we’ve been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months."

[blaavass]

Takk for interessant bidrag Cauldron2.

Det er vanskelig å fatte hvilket lykkeland vi befinner oss i, vi som lever i Norge.

Mish’s Global Economic Trend Analysis forteller om kommuner i USA som må gjennomføre drastiske oppsigelser av kommunalt ansatte, dvs lærere, politi, brannmenn, etc.
http://globaleconomicanalysis.blogspot.com/2010/01/massive-layoffs-coming-in-nyc-nevada.html

Kan det være at resesjonen ikke er over likevel? Kan det være at store deler av verden i løpet av 2010 må innse at det faktisk blir depresjon?

Her er en fantastisk graf som sammenligner eiendomspriser i flere ulike land. Det kan se ut som at nedgangen i huspriser kom først i USA og at nedgangen nå er like rundt hjørnet i mange andre land. Velg realpriser øverst og kikk på grafen for USA (case schiller) og deretter hold musen over ulike land for å sammenligne grafer i forhold til USA. La grafene starte i Q1 1997 siden det er færre land som det finnes data for tidligere enn det. Danmark er ett av de få landene som har opplevd nedgang i boligmarkedet tilsvarende USA, men mange av de andre landene som Sverige, Australia, Nederland, Belgia og Spania er fortsatt svært nærme toppen. Noen av dem ser ut til å ha passert toppen eller er i ferd med å gjøre det…
http://globaleconomicanalysis.blogspot.com/2010/01/housing-bubble-comparison-us-uk-canada.html

Australia er et eksempel på et eiendomsmarked som nå er svært utsatt for nedgang i prisene.
http://globaleconomicanalysis.blogspot.com/2010/02/pool-of-greater-housing-fools-in.html

Hus er fortsatt svært høyt priset i mange land i forhold til hva folk ”can afford”.
http://globaleconomicanalysis.blogspot.com/2010/02/least-and-most-affordable-housing-in.html

Ihht Neill Ferguson har eiendomsprisene i Norge steget mer enn i USA siden 90-tallet.

Hva vil skje med eiendomsprisene i Norge dersom oljeprisen synker under 50 dollar fatet med tilhørende økning i arbeidsledigheten? Hva vil skje dersom rentenivået i tillegg øker? Stigende arbeidsledighet og høye renter er vel den farligste mixen for boligmarkedet…

[Cauldron2]

Jeg tror det, i tillegg til det å følge gjeldsituasjonen i de ulike G20-landene, vil være viktig observere på hva som skjer av proteksjonistiske tiltak.

I 1930 ble Smoot-Hawley loven vedtatt i USA, det var en lov som hevet tariffnivået på amerikansk import og eksport til det høyeste nivået noensinne, og blir av flere (loven nevnes bl.a. i boken A History of Economics: The Past as the Present, 1991. av John Kenneth Galbraith og Jude Wanniski, økonomisk rådgiver til Reagan) oppgitt som en av grunnene til at den Store Resesjonen ble så stor som den ble.

Når tollbarrierene nå er i ferd med å bygge seg opp, mellom blant annet USA og Kina, kan dette føre til en ytterligere forverring av situasjonen i verdens handelsbalanser.

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act
http://en.wikipedia.org/wiki/Jude_Wanniski


Kina: - USA er proteksjonistiske (http://e24.no/makro-og-politikk/article3361463.ece)
Kina tar stålkontroll (http://e24.no/makro-og-politikk/article3415476.ece)
Kina legger straffetoll på amerikansk kylling (http://nrk.no/nyheter/okonomi/1.6979428)
Kina slår tilbake mot amerikansk kritikk (http://nrk.no/nyheter/okonomi/1.6977693)

http://en.wikipedia.org/wiki/Sino-American_relations

[blaavass]

Likte ”Two Santa Clause Theory”, Cauldron2. På en måte har vi foreløpig unngått de verste utslagene i Norge, men dette tar nok til slutt knekken på norsk økonomi også. Det er vanskelig å være rik, i hvert fall å forbli rik i mer enn et par generasjoner.

Når det gjelder handelsbarrierer, så sliter jeg med å se at det er noen førstefiolin i det som skjer nå, selv om det har en viss negativ effekt på levestandarden. For eksempel vil tollbarrierer på landbruksvarer gjøre at det blir mer jordbruk utført i Norge, noe som vil medføre høyere matvarepriser siden det er mindre effektivt å gjøre dette i Norge enn i mange andre land. Men så lenge man har en fri økonomi, så vil den tilpasse seg uten at det blir depresjon.

Handelsbarrierer er en konsekvens av økende arbeidsledighet og krav om at politikere må gjøre noe. Det senker levestandarden gjennom at produkter blir dyrere enn nødvendig, men jeg ser ikke at det skaper depresjon så lenge man har en omstillingsdyktig økonomi.

Kina er vel den som subsidierer sin økonomi mest gjennom sitt valuta-peg. Jeg er ikke sikker på at jeg ville sittet stille og sett på at mitt lands industri forsvant ut av landet fordi et annet land gjennomførte valuta-peg samtidig med sterk økonomisk vekst.

Jeg mener det er tre følgende faktorer som er mest ødeleggende i dagens situasjon:
1. Jeg mener det absolutt mest ødeleggende som skjer nå er at gjeld ikke blir likvidert og at priser ikke får falle ned til riktige nivåer. Når alle penger går til gjeldsnedbetalinger og priser er for høye, så stopper investeringer og økonomisk aktivitet opp. Da er det bedre å la aktører gå konkurs, gjeld bli reforhandlet og assets bli tvangssolgt med dertil kraftige prisfall. Det vil alltid være kjøpere så lenge prisen er lav nok. Dersom priser er for høye, så vil det ikke være noen kjøpere. Hyllevarmere er hyllevarmere fordi prisen er for høy – enkelt og greit.

Når gjeld er likvidert og assets har kommet på et prisnivå der andre er villige til å kjøpe, så kan økonomien starte opp igjen fra et sunt fundament.

2. Statene bruker mer penger enn de får inn i skatter, noe som øker gjelden og gradvis driver skattene opp. Når man til slutt får økte renter på gjelden, så går svært mye av skatteinntektene med til å betale ned på gjelden og skattetrykket vil sannsynligvis øke ytterligere. Statens størrelse og dertil skattetrykk er en byrde på økonomien siden statlig aktivitet alltid vil være lite produktiv sammenlignet med privat virksomhet. Jo mindre staten er, jo mer produktiv og konkurransedyktig er økonomien, og jo høyere er levestandarden. Det er lett å glemme denne sammenhengen så lenge man får oljeinntekter intravenøst...

3. Statlige reguleringer reduserer økonomiens evne til omstilling og er en byrde på dens produktivitet. Det betyr at ressurser ikke flyter effektivt til der de gjør mest nytte, men blir stående i mindre produktiv aktivitet. I tillegg kastes det bort mye ressurser rett og slett på å forholde seg til de statlige reguleringer. Dette er ressurser som kunne vært brukt produktivt i stedet.


Handelsbarrierer er en statlig regulering, men er bare ett av mange elementer under punkt 3. Punktene ovenfor er i prioritert rekkefølge, dvs at jeg mener at punkt 1 og 2 er viktigere for det som skjer og kommer til å skje fremover enn punkt 3 alene.

En sidekommentar til handelsbarrierer. Den norske økonomen Erik S. Reinert har skrevet bøker der han hevder at handelsbarrierer vil være riktig for mange utviklingsland. Man trenger å utvikle en innenlands industri og den trenger beskyttelse til den har vokst seg sterk nok til å konkurrere på et internasjonalt marked. Hvis man fjerner alle handelshindre uten å ha en konkurransedyktig innenlands økonomi, så blir den bare utkonkurrert med dertil konsekvenser for handelsbalansen og gjeldsoppbygging. IMF har på denne måten gjort bjørnetjenester for mange utviklingsland når de har satt som lånevilkår at handelsbarrierer må fjernes.

http://no.wikipedia.org/wiki/Erik_S._Reinert

[blaavass]

Gode resonnementer rundt aksjemarkedet, gull og gullselskaper.
http://www.youtube.com/watch?v=VQcfAq3rt-s

Klipp fra august der Jay Taylor nevner god inngang i gullaksjer i første halvår 2010 ifbm neste nedtur i aksjemarkedet, som han riktignok forventet skulle komme i løpet av høsten 2009.
http://watch.bnn.ca/#clip205492

Jay Taylors hjemmeside:
http://www.miningstocks.com/

[Cauldron2]

Gode innspill der, blaavass.

Har møtt Reinert og hørt teoriene hans, og han peker bl.a. på at USA hadde i 1800-1930 tallet tollbarrierer for å bygge opp sin økonomi. Så vidt jeg vet kritiserer også økonomen Stiglitz Washington-konsensus og IMFs anbefalinger av frihandel for utviklingsland.

Det er i grenselandet politikk og økonomi at problemene oppstår.

To andre faktorer, som også vil være viktige for økonomien fremover,
er hvordan sosial sikkerhet (pensjonsplaner, trygdeløsninger m.m.) skal finansieres og i hvilken grad sosial uro vil påvirke stabiliteten i land.

Blandingen av dommedagsprofeteter, gryende misnøye til regjeringen i USA (den gryende Tea Party-organisasjonen), krav om tilbakegang til gullstandard (Ron Paul) kan utvikle seg til å bli en selvoppfyllende profeti og lede til sosiale omveltninger.

En endret demografi (flere eldre og færre arbeidere til å betale skatter), kombinert med økt gjeldsbyrde for flere land kan føre til økt skattetrykk, som igjen kan føre til økt sosial uro, væpnede konflikter mellom aktivister og regjeringsstyrker, unntakstilstand.

Jeg trekker strikken langt her, men de største revolusjoner har i stor grad kommet som effekt av økt skattetrykk.

"Frankrike var i konstant krig, og krig koster penger. For å finansiere dette, måtte man foruten skatt, ta opp mange lån. Disse regnet man jo med man skulle betale etter krigen var vunnet. Men långiverne ville ha tilbake pengene, og Kongen av Frankrike fikk store problemer med dette."

USA har siden 1940 nesten sammenhengende vært i krig, og det sosiale systemet har i praksis vært konkurs siden 1930.

[blaavass]

Det er gjerne finansielle og økonomiske hendelser som foranlediger historiske hendelser.

Den franske revolusjon og Napoleon ble foranlediget av skotten John Law som skapte the Missisippi bubble og hyperinflasjon i Frankrike. Se fra (4:40) og (29:50) i Niall Fergusons dokumentar.
Del 3 - Blowing Bubbles (http://video.google.com/videoplay?docid=-545930454338776455&ei=7JRgS6n7Noye-AaM8Jm-CA&q=the+ascent+of+money+part#docid=-2329733959986813272)

Belastningene etter første verdenskrig og depresjonen på 30-tallet ga Hitler muligheten til å gripe makten i Tyskland.

I mange land er sannsynligvis trygde- og pensjonsordninger i praksis et ponzi scheeme. Slike systemer var opprinnelig organisert med innbetalinger som setter av penger som sammen med avkastningen er tilstrekkelig til å dekke fremtidige utbetalinger. I mange land er disse systemene i stedet basert på pay-as-you-go. Det går fint så lenge de store etterkrigskullene er i arbeidlivet og betaler inn. Når disse pensjoneres og det er få igjen til å betale inn samtidig som det er mange som skal ha utbetalinger, da bryter systemet sammen. USA er på full vei inn i denne situasjonen i de kommende årene. Sosial uro?

Dette tiåret blir svært interessant med store muligheter for dramatiske økonomiske hendelser som kan resultere i sosial uro, få nasjonalisme til å blusse opp, rivalisering mellom land, mulig hyperinflasjon, etc. Det er slike forhold som kan ende i krig og gi tyranner mulighet til å gripe makten. Vi får håpe det ikke skjer denne gangen.

[blaavass]

Jeg har inntrykk av at veldig mange ser for seg at Kina skal redde veksten i årene fremover.

Jim Chanos styrer et hedgefund som har fokus på shorting. Han er konstant på utkikk etter bobler som han kan shorte. Beste indikasjon på bobler er unormalt høy kredittvekst. Her gir han en fantastisk gjennomgang av kinesisk økonomi med fokus på bobletendenser i det kinesiske eiendomsmarkedet.
http://www.youtube.com/watch?v=99HNFCn5RP8&feature=player_embedded#

Et underutviklet lands økonomi vokser typisk ved at befolkningen strømmer til byene og kommer i mer produktivt arbeid. Videre utdannes befolkningen noe som øker produktiviteten. Disse to effektene vil etter hvert bli ”brukt opp” og veksten stagnere. Da forsøkes typisk veksten opprettholdt gjennom bruk av kapital og kreditt.

I Kina har strømmen til byene mange steder snudd. Økt utdannelse er forholdsvis oppbrukt som vekstmiddel. I de siste årene har kreditt økt dramatisk og statlige stimulansepakker har vært enorme.

Når man samtidig ser at Kina i de siste årene har hatt større investeringer i fixed assets (% av GDP vekst) sammenhengende over en lengre periode enn noe annet land har hatt tidligere. Med fixed assets menes infrastruktur, fabrikker, eiendom og kontorbygg. De er i ferd med å bygge kontorbygg som tilsvarer kontorplasser til hele den kinesiske befolkning. Boligmarkedet har boblepriser. Opp i mot 20% av kommersiell eiendom står ledig, men bygging av nytt fortsetter. Etc, etc.

Investering i fixed assets utgjør en betydelig del av den kinesiske veksten. Hva om veksten i Kina stopper opp og de må gjennomgå en kraftig resesjon? Sosial uro?

Hva vil i så fall skje med oljeprisen?

[blaavass]

Bobler identifiseres best ut fra kredittvekst.

http://www.dn.no/forsiden/naringsliv/article1832828.ece

"Han peker på at verdiskapningen i Norge (bruttonasjonalproduktet) har steget med 50 prosent de siste syv årene.

På samme tid har de samlede utlånene til bedrifter og husholdninger økt med 100 prosent.

- Og det som har vokst aller mest er lån med pant i bolig som har vokst 150 prosent. Altså tre ganger mer enn bnp, konstaterer finanstilsynsdirektøren.

Han mener den kraftige veksten gjør at boligsektoren nå utgjør en langt større risiko for det norske finanssystemet."

[blaavass]

Her er en glimrende kronikk av Niall Ferguson:
http://www.dn.no/forsiden/borsMarked/article1836990.ece

Her er noen små utdrag:
"Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities."

"On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic."

[blaavass]

Robert R Prechter Jr har skrevet boken ”Conquer the Crash” som ble utgitt første gang i 2002 og ny utgivelse i 2009 med oppdateringer.

Prechter’s filosofi tar utgangspunkt i Elliot Wave teori som med bakgrunn i sosiale stemninger gjør at aksjemarkedet går i bølger. Bølgene er fraktaler, dvs at man i en og samme graf vil finne samme bølgemønster i stor og liten skala.

http://en.wikipedia.org/wiki/Elliot_wave

”If the wave is heading in the same direction as the wave of one larger degree, then it subdivides into five waves. If the wave is heading in the opposite direction as the wave of one larger degree, then it subdivides into three waves. Waves subdivide this way down to the smallest observable scale, and the entire process continues to develop larger and larger waves as time progresses.”

Prechter spår børskrasj og sterk deflasjon som resulterer i depresjon. Han bygger det på at Dow Jones og World Stock Index har fullført femte bølge i en Supercycle som startet etter børskrasjet i 1929. Prechter mener også at dette krasjet blir verre enn i 1929, rett og slett fordi alt har gått høyere opp (verdsettelser, kreditt, etc) enn hva det var i forkant av 1929. Fordi det har blitt depresjon etter alle virkelig store børskrasj, så mener han at det også blir depresjon nå.

[blaavass]

I tillegg har Prechter mange fundamentale resonnementer som støtter opp om det bølge-teorien signaliserer.

Her er litt av Prechters syn på penger og inflasjon/deflasjon (skrevet i nyhetsbrev fra 2003 til 2007):

“…analysts constantly confuse credit creation with money creation.” (November 17, 2005)

“Currency inflation can continue indefinitely, but extensive credit inflation never does; it always implodes.” (June 16, 2006)

”Most people envision the central bank as a currency inflation machine, a ”printing press”. But most of the time, the central bank is not inflating by ways of its press. It does create currency inflation when it monetizes government debt. It facilitates credit inflation when it panics and lowers its lending rate to below market levels.” (March 23, 2007)

“The inflation of the past 73 years is not primarily currency inflation but credit inflation. Credit can implode in a deflationary depression; currency cannot.” (June 16, 2006)

“Perhaps the Fed ultimately will resort to runaway currency printing, but before then it will try to keep the monetary system afloat and the government’s bonds – its own reserves – valuable. This is the period in which deflation will strike. After it is obvious that credit stimulation has failed, hyperinflation may be a “last resort”, but I stress the word may.” (June 16, 2006)

“Can you imagine the laughingstock that the Federal Reserve System would become if its “assets” consisted of defaulted mortgages, bonds of bankrupt companies and municipalities, IOUs of shaky foreign governments and stock certificates of companies no longer in existence? Can you imagine the panic that would ensue to escape a monetary system with such assets as its reserves?” (January 16, 2003)

“The Fed would commit suicide if it were to hyper-inflate, because Federal government bonds are the reserves of the Fed.” (November 17, 2005)

“If investors worldwide were to become informed, or even suspicious, that the Fed would follow the ‘copter cours, it would divest itself of dollar-denominated debt assets, causing a collapse in the value of dollar-denominated bonds, notes and bills. This collapse would be deflation. It would be a collapse in the dollar value of the outstanding credit supply.” (November 17, 2005)

“Von Mieses was exactly right: “There is no means of avoiding the final collapse of a boom brought about by credit expansion.”” (November 17, 2005)

“Self-indulgent and distress borrowing for consumption cannot go on indefinitely. But while it does, the “money supply” – actually the credit supply – inflates. But it is all a temporary phenomenon, because debt binges always exhaust themselves.” (April 30, 2007)

“The Fed is indeed the underlying motor of inflation because it monetizes government debt, but the banking system, thanks to the elasticity of fiat money, manufactures by far the bulk of the credit – credit, not cash.” (April 30, 2007)

“Flat-out currency inflation would have a powerful tendency to show up immediately in gold and silver prices. Credit is another matter. Gold prices reflect the fact that an increase in debt is not the same as an increase in cash. New cash is here to stay; debt expansion can morph into contraction. …When the debtors become strapped, they sell other assets, including gold, to get cash to pay their creditors. (April 30, 2007)

”The true source of deflation is system-wide bankruptcies induced by the contraction of a prior credit bubble. Without the preceding bubble, “demand” would never “collapse”. (January 16, 2003)

“Easy credit has in turn created an unsustainable debt load throughout the society. Nothing can relieve that load except what has always done so: a deflationary collapse.” (January 16, 2003)

“Something has to give, and that something will be prices.” (2004)

“With virtually everyone prepared for either good times or severe inflation, bad times and deflation will catch them all off guard.” (November 17, 2005)

[Cauldron2]

Interessant artikkel som Mises.org posta på facebook.

Setter Norges statsunderskudd i perspektiv.

http://www.zerohedge.com/article/just-how-ugly-sovereign-default-truth-how-self-delusions-prevent-recognition-reality

[blaavass]

Robert Prechter har en interessant analogi mht om Fed kan skape inflasjon videre nå.

”I am tired of hearing people insist that the Fed can expand credit all it wants. Sometimes an analogy clarifies a subject, so let’s try one.

It may sound crazy, but suppose the government were to decide that the health of the nation depends upon producing Jaguar automobiles and providing them to as many people as possible. To facilitate that goal, it begins operating Jaguar plants all over the country, subsidizing production with tax money. To everyone’s delight, it offers these luxury cars for sale at 50 percent off the old price. People flock to the showrooms and buy. Later, sales slow down, so the government cuts the price in half again. More people rush in and buy. Sales again slow, so it lowers the price to $900 each. People return to the stores to buy two or three, or half a dozen. Why not? Look how cheap they are! Buyers give Jaguars to their kids and park an extra one on the lawn. Finally, the country is awash in Jaguars. Alas, sales slow again, and the government panics. It must move more Jaguars, or, according to its theory – ironically now made fact – the economy will recede. People are working three days a week just to pay their taxes so the government can keep producing more Jaguars. If Jaguars stop moving, the economy will stop. So the government begins giving Jaguars away. A few more cars move out of the showrooms, but then it ends. Nobody wants any more Jaguars. They don’t care if they’re free. They can’t find a use for them. Production of Jaguars ceases. It takes years to work through the overhanging supply of Jaguars. Tax collection collapse, the factories close, and employment soars. The economy is wrecked.

…Finally the country is awash in credit….If credit stops moving, the economy will stop. So the banks begin giving credit away, at zero percent interest. A few more loans move through the tellers’ windows, but then it ends. Nobody wants any more credit. They don’t care if it’s free. They can’t find any use for it. Production of credit ceases. It takes years to work through the overhanging supply of credit. Interest payments collapse, banks close, and unemployment soars. The economy is wrecked.”

Analogien gjelder vel først og fremst privat sektor. Stater kan jo øke gjelden sin i stedet, men det må ta slutt en gang det også - i verste fall med valutakrasj.

[Cauldron2]

For å sitere en venn av meg:

"Se på det slik: Man kan holde statsobligasjons-Ponzien gående i femti år til hvis man bare "blir enige" om å kjøpe nok av hverandres gjeld når private ikke gjør det."

[blaavass]

Her er en video med Robert Prechter og hans forventninger til 2010:

http://www.youtube.com/watch?v=5ZE2dPzln5w&feature=related

Cauldron2, statsobligasjoner oppfører seg også som en boble. Boblen kan blåses opp over lengre tid og til større proporsjoner enn man kan forestille seg. Men når boblen har sprukket, så er det veldig vanskelig å holde det gående videre.

Kina har redusert sitt kjøp av amerikanske statsobligasjoner. Andre land trenger penger til å stimulere egen økonomi og kan ikke putte like mye penger i statsobligasjoner. Den amerikanske sentralbanken har bidratt med kjøp av amerikanske statsobligasjoner. Det er enorme mengder statsobligasjoner som må selges i de kommende år for å rullere eksisterende pluss nye til å dekke underskuddene. Hvem i all verden skal kjøpe disse, bortsett fra sentralbanken?

Flere euroland har nå problemer med gjelden sin. Jeg klarer ikke å se at dette kan holdes gående i særlig mange flere år nå, uansett hvor enige noen skulle være.

Det som kommer til å skje, er at obligasjonsmarkedet begynner å kreve mye høyere renter av de landene som i realiteten er konkurs. Portugal har allerede begynt å kjenne dette såvidt. Resultatet vil bli at land ikke klarer å betale avdragene lenger, noe som igjen vil resultere i valutauro.

http://www.dn.no/forsiden/utenriks/article1836047.ece

http://www.dn.no/forsiden/utenriks/article1831649.ece

[blaavass]

Tydelige horisontale motstand-/støttenivåer i charts gir sterke signaler når de brytes.

S&P500 index fra tidlig 70-tallet og frem til nå. (http://www.marketwatch.com/investing/index/SPX/charts?countryCode=US&submitted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=20&freq=1&comp=Enter%20Symbol(s)%3A&compidx=aaaaa~0&compind=aaaaa~0&uf=0&ma=0&maval=50&lf=1&lf2=4&lf3=0&type=64&size=2&optstyle=1013)

Det kan se ut som en stor dobbelt topp i chartet med halslinje på 800. Siste stigning kan være starten på en skulder i formasjonen. Dersom denne formasjonen fullføres og det blir brudd ned gjennom 800, så tolker jeg det som et dramatisk negativt signal.

[Cauldron2]

Flott video av Prechter. Er en stor fan av teknisk analyse, men har vært skeptisk til Elliottwave-analyser.

Men desto mer jeg leser av Schumpeter, Mises, Rothbard, desto mer lurer jeg på hvordan moderne økonomi kan fortsette å begå de samme feilene om og om igjen.

Den doble toppen i S&P500 la jeg merke til i midten av 2009, og nevnte den for flere av de jeg studerer sammen med. Skepsisen hos de var heller stor.

Kan en dobbel topp utvikle seg over en så lang tidsperiode?

[Cauldron2]

Les forøvrig denne posten (http://www.zerohedge.com/article/pitiful-16-billion-30-year-auction-closes-4720-record-direct-take-down-2407) på ZeroHedge.com om den siste 30-års auksjonen som hadde den laveste andelen utenlandske investorer på lenge. Står nærmere forklart i kommentarfeltet om begrepene.

[blaavass]

Jeg tror generelt for både teknisk analyse og elliot wave at det er viktig å ha en fundamental begrunnelse også. Hvis ikke, er det lett å kaste bort mye penger på falske signaler. Fundamental forståelse angir retningen, teknisk analyse gir timing'en.

Dersom fundamental forståelse tilsier problemer og det kommer en tydelig teknisk formasjon som brytes nedover, så er det en høy sannsynlighet for at en nedgang materialiserer seg.

I Prechters bok er det imponerende mange resonnementer rundt fundamentale forhold som støtter opp rundt hans elliot wave analyse. Har lagt merke til flere imponerende gode forecasts basert på elliot wave, som f.eks. det sterke fallet i oljeprisen fra ca $150. Legger også merke til at man veldig ofte kan telle 5 bølger i kurs-grafer før dampen er oppbrukt. Det rimer også at bølge 5 er kraftigst, siden veldig mange aksjer avslutter stigningen med en klimaks-topp. Ref salgssignal som jeg har beskrevet for gullaksjer lenger opp i tråden.

I mitt hode er det ingen prinsipiell begrensning for størrelsen på tekniske formasjoner. Jo større, jo sterkere signal. Men som sagt, jeg mener det må være fornuftig ut fra fundamentale resonnementer også. Depresjon i USA rimer i mitt fundamentale hode. Dersom den doble toppen skulle slå til, vil den støtte Prechters resonnement om at dersom det blir (hyper-)inflasjon blir det uansett deflasjon først.

I sum mener jeg det er nok av signaler som tilsier at man i disse tider skal være svært forsiktig med børs og leverage i personlig økonomi (huslån/lønn/likvide midler). Om det ikke skulle slå til, så er det begrenset oppside man evt går glipp av.

[blaavass]

Oppdaget nettopp denne artikkelen i dagens dn.no. Morsomt at Spetalen har kommet til samme konklusjon og har solgt unna og satt pengene sine i banken.

http://www.dn.no/forsiden/borsMarked/article1839198.ece

Oljefondet derimot har økt sin aksjeandel og er foreløpig såre fornøyd med det... Tror ikke Oljefondet har noe gull, men mener de har en del amerikanske statsobligasjoner...

[Cauldron2]

Denne rapporten fra DnB NOR kan sikkert være interessant lesning:

http://fokus.hive.no/docs/2010/dnb.pdf

Økonomen virket meget optimistisk.

[blaavass]

Her er en interessant presentasjon av Mish Shedlock:
http://www.youtube.com/watch?v=1YKc0UolTqE&feature=PlayList&p=7AD5500E07BEDF95&index=0

Mish mener bestemt at det blir deflasjon. Mitt inntrykk er at han kun ser på pengemengden, men at han ikke har tatt inn over seg muligheten for at tilliten kan forsvinne for en valuta. Tilliten til dollar kan forsvinne dersom USA ikke klarer å betale avdragene på sine obligasjonslån (konkurs) eller om sentralbanken trykker penger som Zimbabwe. Det er også store mengder dollar som ligger på kistebunnen som valutareserver i mange land. Dersom disse blir sendt ut i omløp i stor skala, så vil jeg tro at det kan ha en betydelig effekt på dollarens verdi.

Mish har Austrian Economics tankegods i likhet med de fleste andre som er gode til å forutse hva som skjer fremover i tid.

Mish sin blogg:
http://globaleconomicanalysis.blogspot.com/

[Cauldron2]

Ang Hellas:

Jeg skjønner ikke helt inneholdet i disse to artiklene fra ZeroHedge (1) (http://www.zerohedge.com/article/dangers-greek-regulatory-arbitrage-and-unfortunate-entity-names) og (2) (http://www.zerohedge.com/article/titlos-llc-special-purpose-vehicle-downgrade-catalyst-trigger-which-will-destroy-greece), men jeg skjønner såpass at Titlos PLC er et konstruert foretak med den hensikt i å skjule gjeld for Hellas, og hvis Hellas blir nedgradert på rating, kan dette utløse ytterligere 43 milliarder kroner i gjeld for Hellas som må betales innen kort tid, på toppen av ca 120 milliardene (av totalt 200 mrd kroner som forfaller i 2010) som skal betales i april og mai. Sett i forhold, hadde Hellas et BNP på 1 445 mrd (2006), med en budsjettbalanse på -2,5% (wikitall).

Dette setter ting litt i perspektiv.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/madoff/GGB%20Maturities.jpg

[blaavass]

Jeg nevnte i post #13 lenger oppe spenninger mellom Kina og USA og at Kina kan bruke Dalai Lamas besøkt til Obama som unnskyldning til å selge US bonds. Ser ut som at det er i ferd med å skje. Selv om Kina ikke dumper obligasjoner i stor stil, så er det ganske dramatisk at de nå reduserer sin beholding i stedet for å øke den som tidligere.
http://www.youtube.com/watch?v=3pYziop0Lto&feature=sub

Her er også et eksempel på imperialistiske spenninger mellom USA og Kina. Tipper dette vil øke gradvis videre.
http://www.dn.no/forsiden/utenriks/article1840867.ece

[Cauldron2]

http://www.scribd.com/DUD100217-1/d/26993207

Downunder Daily
It’s Simple: Too Much Debt
It seems there is still too much debt in the world. It’s largely in the developed world. The great recession led to the great debt swap, so debt-stress is now a greater problem for the public sector than the private sector. There may be more swaps dressed-up as solutions – say, core Europe bailing out the periphery – but swaps won’t fix the problem. The essential problem is there’s too much debt. Worryingly, in many countries aggregate leverage is now at levels where there is no historical precedent for debt reduction to not involve crisis, default or inflation.

Exhibit 1 provides a snapshot of economy-wide debt levels in major OECD countries. Not one of them has total debt of less than 245% of GDP. Greece, as an aside, has total debt-to-GDP of around 225%. Greece is not unusual because of its indebtedness, but because of its cash-flow: Greece’s budget and external deficits are both over 10% of GDP.

How much debt can an economy sustain? In principle, any level of debt is sustainable so long as the debt funded an asset that generates income that services the debt. If the average debt cost is, say, 5%, then a
debt-to-GDP ratio of 300% is not a problem if there are assets generating returns equivalent to 15% of GDP.

The problem now is, in aggregate, the debt was not used to produce assets that generate those returns. If debt isn’t self-funding, a borrower has three options.

First, service the debt (by increasing saving). Second, transfer the debt (get bailed out). Third, default on the debt, either overtly or covertly (say, via inflation).

A few points about this:
First, reducing leverage – regardless of how – typically requires considerable time. Exhibit 2, from a McKinsey’s report, shows that the typical deleveraging phase following a financial crisis is 6-7 years.

Second, an extended period of de-leveraging does not require an extended period of sub-trend growth. This is for two reasons. First, the growth in debt is not linked to economic growth: it’s the change in the rate of debt growth that affects economic growth. The stock of debt is like the stock of inventories: the change in inventories (or debt) affects the level of GDP; and it’s the change in the change that affects the growth in GDP. Put another way, once spending is below income (saving is positive), leverage can be reduced even if spending growth is in line with income growth.

The second reason that extended deleveraging doesn’t imply extended sub-trend growth is because much of the recently borrowed debt was not used to finance expenditure, but to acquire pre-existing financial assets. Borrowing can slow due to a slowdown in asset purchases, rather than spending.

Exhibit 3 shows private sector GDP growth in the US, and the acceleration (the change in the four-quarter change) in private non-financial debt. Note that the link between debt acceleration and GDP growth loosened in the 1990s and 2000s. This, in our view, is because a rising share of debt was
used to fund asset purchases.

Third – and this is an important point – because the response to
the great recession was the great swap, in many economies deleveraging has not yet started. The private sector has moved to reduce leverage, but the public sector has increased leverage. Take the US as an example.

Exhibit 4 shows the four quarter change in government debt and private
non-financial sector debt. Total non-financial debt increased by 10.4 percentage points of GDP over the year to September quarter. (Including financials, debt fell by 4 percentage points of GDP over the two quarters to September 2009 quarter.)

Finally, deleveraging now is likely to be more difficult than usual.

First, the adjustment is more difficult because it involves more countries. Prior debt crises typically involved regions that were, in a global macro context, relatively small. Even the Asian crisis of 1997-98 did not have a material impact on the developed economies. This time, however, high debt exists in economies that account for a very large proportion of global
output. Increasing national saving is clearly easier to achieve in a buoyant global environment. Asia’s adjustment, for example, was assisted by strength in developed economies. Now, however, a synchronized move to reduced leverage would have second round effects through the developed world, threatening a double-dip recession in developed economies.

The second difficulty is that the starting point is very elevated
leverage. Prior successful deleveraging – that is, deleveraging that avoided default or serious economic distress – started from lower leverage levels. Of the episodes McKinsey identified, the highest starting point leverage for ‘growing out of debt’ was 180% of GDP. This is roughly half the level of
leverage in many developed economies. Of episodes that required ‘belt tightening’ – but did not also include financial crisis – the highest leverage starting point was 242% of GDP.

In other words, there is no historical precedent for an economy with debt to GDP of over 250% of GDP – many developed economies now have debt of around 350% of GDP – to avoid financial crisis (or inflation) as they de-lever.

We’ve had a financial crisis, of course. But that crisis was centered on the financial system. Importantly, that led to little or no decline in non-financial leverage. In the US, for example, non-financial sector leverage is now (September 2009 quarter) at a new all-time high. In short, there’s still too much debt, and achieving debt-reduction from here will be a painful, risky, task.

http://bildr.no/thumb/591184.jpeg (http://bildr.no/view/591184)

http://bildr.no/thumb/591185.jpeg (http://bildr.no/view/591185)

http://bildr.no/thumb/591186.jpeg (http://bildr.no/view/591186)

http://bildr.no/thumb/591187.jpeg (http://bildr.no/view/591187)

[Cauldron2]

Her kommer deflasjonen: http://e24.no/makro-og-politikk/article3527170.ece

Hvor lang periode vil man ha deflasjon i USA før hyperinflasjonen setter inn?

[blaavass]

Bra intervju med Niall Ferguson om statsgjeld og spredning av problemene.

http://www.youtube.com/watch?v=JzpsgDdoE0Y&feature=related

[Cauldron2]

Rapporten av Reinhart og Rogoff som blir nevnt av Fergusson:

http://www.scribd.com/doc/27108486/AER-2009-Reinhart-and-Rogoff

[blaavass]

George Soros intervjuet høsten 2008 om finanskrisen:
Soros er kritisk til hvordan finanskrisen er blitt håndtert i USA. Etter min mening har han mange fornuftige tanker i tråd med hvordan bankkrisen i Norge, Sverige og Finland ble løst på slutten av 80-tallet og begynnelsen av 90-tallet.

Del 1:
http://www.youtube.com/watch?v=Ngbj_vjqdus&feature=related
Del 2:
http://www.youtube.com/watch?v=aZGlQTo0iAw&feature=related
Del 3:
http://www.youtube.com/watch?v=mlyIZMisBf4&feature=related

The collapse/depresson avoided, artificial life support worked, but economy only moving forward due to stimulus.
Soros mener Kina burde la renminbi’en øke i verdi. Det vil redusere inflasjonen i Kina samtidig som det vil bidra til inflasjon i USA, noe han mener vil være bra for begge land.
http://www.youtube.com/watch?v=FbbDWMSMU7I&NR=1

Svakere vekst fremover
Kina vil erstatte USA som motor for vekst, men det vil være en betydelig mindre motor.
http://www.youtube.com/watch?v=JJVZ8sf6uBI

Stagflasjon er sannsynlig
Soros mener kollaps er unngått gjennom pengetrykkingen, men han mener også at det vil bli veldig vanskelig å trekke pengene inn igjen i tilstrekkelig grad. Det er altså sannsynlig at det blir stagflasjon dersom man lykkes med å unngå deflasjon.
http://www.youtube.com/watch?v=mHV0KBtOnXs

There are no attractive currencies, rather demand for real assets.
Soros mener det finnes noen få sunne valutaer, som feks NOK, men at disse valutaene er forholdsvis små og de er allerede dyre. Generelt er det ingen attraktive alternative valutaer i stedet for dollar.
http://www.youtube.com/watch?v=rmCd9VhpGLA&feature=related


Soros skal visstnok ha uttalt at gull er den ultimate boblen. Han skal visstnok også ha øket sine investeringer i gull betraktelig i den senere tid. Soros har tidligere uttalt at dersom han ser en boble utvikle seg, så hopper han på boblen. Han er selvsagt flink til å hoppe av igjen før boblen sprekker og gjerne shorte den på vei ned igjen;-)

Det er fullt mulig å se for seg at hans teori om refleksivitet kommer til anvendelse mht gull. Gull har brutt $1000. Dersom gull korrigerer nedover og deretter går høyere etter å ha testet $1000, samtidig som lange renter øker på amerikanske statsobligasjoner, Kina lar renminbi’en stige i verdi mot dollar, inflasjonstall i USA begynner å øke, gjeldsproblemer tiltar i flere land, sentralbanker kjøper gull i stort monn, så kan sentimentet bli svært bullish for gull med sterk frykt for inflasjon og flukt fra dollar og for så vidt andre valutaer. Gull kan på denne måten, gjennom refleksivitet, utvikle seg til en utrolig boble.

[blaavass]

Her er en pedagogisk tysker som har bra track record på å forutse hva som skjer i økonomien. Han har laget mange video’er på youtube om økonomiske sammenhenger, samt at han har en blogg.

http://www.youtube.com/user/jberni1

http://www.berninger.de/

Litt kortfattet mener han at:
- I mars/april i år begynner kollapsen, sannsynligvis med banking holidays og revalueringer av valutaer og hindringer for kapital flukt i flere land.
- Spania er det landet som utløser kollapsen
- Det blir et ”toilet shaped” recovery…
- Akkurat som en tsunami der vannet trekker seg tilbake før bølgen kommer, blir det deflasjon i 2010, men sterk inflasjon/hyperinflasjon videre.

Det virker som at han ikke ønsker å gi konkrete investeringsråd på youtube. Antar han ikke ønsker å gi rådene bort gratis, siden levebrødet hans er økonomisk rådgivning. Likevel, så virker gull å være sentralt i hans strategier.

[blaavass]

"En fersk rapport viser nå at Soros Fund Management økte sin investering i det børsnoterte gullfondet SPDR Gold Trust med 152 prosent i fjerde kvartal."

http://www.hegnar.no/bors/article412032.ece

Smart money?

[blaavass]

Det kinesiske forsvaret mener Kina bør dumpe amerikanske statsobligasjoner som en reaksjon på USAs våpensalg til Taiwan:
http://www.youtube.com/watch?v=oYmvu0gLhso&feature=sub

Visstnok har USA nå begynt å skjule hvem som er direkte budgivere for amerikanske statsobligasjoner (1:50). Kanskje for å skjule hvor mye FED kjøper?
http://www.youtube.com/watch?v=aTYbtxNrxXs&feature=PlayList&p=28ADB518A90AF474&index=8

[Cauldron2]

Visstnok har USA nå begynt å skjule hvem som er direkte budgivere for amerikanske statsobligasjoner (1:50). Kanskje for å skjule hvor mye FED kjøper?
Mange interessante vidoer her. Dette har derimot ZeroHedge.com kjørt artikler på de siste 2-3 ukene. Anbefaler deg å ta en titt der :)

[blaavass]

Fryktelig mye å lese på ZeroHedge, men innholdet virker bra:-)

Denne grafen for pengemengden skyter fortsatt oppover, se link under (grafen oppdateres hver onsdag). Kan ikke skjønne at den kan fortsette slik gjennom hele 2010. Grafen rimer forsåvidt bra i forhold til at FED muligens kjøper statsobligasjoner i det skjulte. Det er ihvertfall ikke økt låneopptak i privat sektor som får den til å skyte opp slik. Kan dette virkelig ende bra? Det er ihvertfall ikke lurt å shorte så lenge denne grafen stiger slik.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

Adjusted Monetary Base:
The sum of currency in circulation outside Federal Reserve Banks and the U.S. Treasury, deposits of depository financial institutions at Federal Reserve Banks, and an adjustment for the effects of changes in statutory reserve requirements on the quantity of base money held by depositories.

[blaavass]

"jberni1" er i videoen under veldig tydelig på at han mener det vil skje ting i valutamarkedene nå i april med devalueringer. Vi får se, alltid vanskelig å tidfeste hendelser. Jeg er veldig enig i at når Kina lar renminbien styrke seg betydelig mot dollar, så begynner dominobrikker å falle og dekoblingen settes i gang for alvor.

http://www.youtube.com/watch?v=Q6emo-2209Y&feature=sub

Det er veldig logisk at når Kina ikke ønsker å kjøpe mer amerikanske statsobligasjoner, så blir det vanskelig å holde peg'et mot dollar. Husk at samtidig som at dollar har sunket i verdi det siste tiåret, så burde renminbien ha styrket seg. I stedet har renminbien fulgt dollaren ned. Det er altså store ubalanser som skal rettes opp.

Devalueringer i april kan passe bra med at gull fortsetter stigningen og setter ny all-time-high i dollar etter den pågående konsolideringen.

[blaavass]

Se graf for 10 years US treasury bonds:

http://finance.yahoo.com/echarts?s=%5ETNX#chart3:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

For meg ser det ut som at rente-nivået har slått flere ganger mot en horisontal motstandslinje på 3,85 og at det snart kan bli et brudd oppover gjennom dette motstandsnivået. Når motstandsnivået endelig brytes, så kan reaksjonen oppover bli signifikant.

[Cauldron2]

Jupp, var vel det man må betegne som en fin omvendt hodeskulder-formasjon?

[blaavass]

Robert Prechter er fortsatt klar for deflasjon og sterkere dollar:
http://www.youtube.com/watch?v=KRncLJnloJc

[blaavass]

Virker som at Niall Ferguson begynner å bli mer stresset mht kollaps i USA:
Mange bra kommentarer her. Glenn Beck har vett til å holde munnen igjen også og la gjesten snakke.
http://www.youtube.com/watch?v=ML4sjhesCTA&feature=PlayList&p=2FDF0339065739B8&index=18

Niall spør etter den neste Ronald Reagan for å rydde opp. Vel, Peter Schiff var stor fan av Ronald Reagan og hadde faktisk stor plakat av ham på hybelen sin da han var student. Blir spennende å følge Peter Schiff sin valgkamp mht senatet. Med sine pedagogiske taleevner, track record for å forstå økonomi og sin integritet, kan han nå helt til topps med vinden i ryggen og litt flaks:-)

[blaavass]

Her er et veldig bra intervju med Niall Ferguson fra februar der han blant annet kommenterer den langsiktige utviklingen for India og Kina.

Kina har stor vekst nå fordi de ikke har demokrati (enkelt å flytte folk som er i veien for utbygginger), men vil få problemer etterhvert nettopp fordi de ikke har demokrati (kan selvsagt endre seg) og fordi ett-barn politikken ligger der som en demografisk bombe. India har saktere vekst nå pga demokrati, men har et ryddig rettssystem og etterhvert kan potensialet bli utløst og gi veldig høy vekst.

http://www.youtube.com/watch?v=0PWrL7p-HG4&feature=related

http://www.youtube.com/watch?v=RXGf09-AAxo&feature=related

http://www.youtube.com/watch?v=v5y7Oy6Wals&feature=related

[blaavass]

Det blir interessant å se hva som skjer i det engelske boligmarkedet i løpet av 2010, spesielt mht næringseiendom som er det neste som er forventet å få problemer pga lavere forbruk.

http://www.dn.no/forsiden/utenriks/article1859480.ece
"Problemet med store deler av eiendomsmarkedet, og særlig næringseiendom, er at verdien av bankenes eiendomsportefølje ikke ble nedskrevet til reell verdi under finanskrisen. Dette ble i stor grad gjort for å hindre at lånebetingelsene ble brutt, og at låntagerne skulle bli tvunget til å innfri lån de åpenbart ikke var i stand til å innfri. "

Det kan bli kinkig å kombinere problemer i eiendomsmarkedet med økende gjeldskrise.

http://www.dn.no/forsiden/utenriks/article1843842.ece
"Ifølge økonomer kan det britiske budsjettunderskuddet i år bli på hele 180 milliarder pund eller nærmere 1.700 milliarder kroner, skriver avisa The Telegraph.

Dersom anslagene stemmer, vil budsjettunderskuddet utgjøre 12,8 prosent av bruttonasjonalprodukt (BNP). Det er 0,1 prosent høyere enn det rekordhøye underskuddet i Hellas som har skapt krisestemning i eurosonen i EU."

Mulig det blir valutaproblemer for England innen 2010 er omme?

[blaavass]

Charles Nenner er en kjent bølge-analytiker av markeder. Han traff bl.a. veldig bra mht toppen i aksjemarkeder i 2007.

Her varsler han om krasj for Dow Jones allerede i april, muligens ned til 6000. Han mener oljeprisen topper ved $80 nå i slutten av mars og synker i ett år. Han har mange konkrete meninger i intervjuet under.

Artikkel av ZeroHedge:
http://www.zerohedge.com/article/technical-analyst-charles-nenner-predicts-market-may-crash-april

Radio-intervju:
http://www.madhedgefundtrader.biz/Charles_Nenner_03_11_201.html

[blaavass]

En veldig bra og høyaktuell video-blogg fra Peter Schiff:

http://www.youtube.com/watch?v=11WlFlO_mDg&feature=sub

[blaavass]

Arch Crawford bruker astrologi og teknisk analyse for å forutse markeder. Høres sprøtt ut, men hans track record skal være ekstremt god.
http://www.crawfordperspectives.com/

Robert Prechter trakk frem Crawfords dyktighet i et intervju.
http://realitylenses.blogspot.com/2010/02/arch-crawford-on-frisbys-bulls-and.html

CNBC intervju fra desember 2008 som nevner Crawfords gode track record.
http://www.crawfordperspectives.com/documents/ACR004-002.wmv

Radio intervju 16. mars 2010 der Crawford spår en stor krasj i løpet av 2010. I tillegg er han bullish til gull nå.
http://podcast.streetiq.com/streetiq/?GUID=12322557&Page=MediaViewer&ChannelID=3130

[blaavass]

Særdeles gode betraktninger av Philip Manduca i dette intervjuet:
http://www.zerohedge.com/article/ecu-groups-philip-manduca-we-are-tipping-point-and-only-thing-may-save-euro-collapse-us

Kort fortalt sier han følg med på de lange rentene på amerikanske statsobligasjoner. Når de begynner stige, vil dollaren og børsene falle igjen. Yen vil da stige. Jeg vil tro at NOK vil stige også. Han mener vi er nærme tippepunktet for at dette skal skje. I et miljø med svekkelser av valutaer bør man eie noe gull.

Fasinerende å samtidig legge merke til rariteter rundt auksjonene for amerikanske statsobligasjoner. Mer vanskelig å se hvem som faktisk kjøper, færre som byr, økende renter, etc.
http://www.zerohedge.com/article/32-billion-7-year-auction-closes-3374-very-weak-auction
http://www.zerohedge.com/article/30-year-verge-breakdown-yield-hits-highest-june-2009
http://www.zerohedge.com/article/global-macro-update-1
http://www.zerohedge.com/article/weak-5-year-auction-shakes-treasury-complex-enormous-tail-indirects-drop-bid-cover-weakest-s

[Cauldron2]

Kort fortalt sier han følg med på de lange rentene på amerikanske statsobligasjoner. Når de begynner stige, vil dollaren og børsene falle igjen. Yen vil da stige. Jeg vil tro at NOK vil stige også. Han mener vi er nærme tippepunktet for at dette skal skje. I et miljø med svekkelser av valutaer bør man eie noe gull.

Har du noen gode sider med oversikt over amerikanske statsobligasjoner, eller sider med flere statsobligasjoner?

[blaavass]

Mye bra info her:
http://www.finanslinker.net/

Grafer for ulike US statsobligasjoner:
http://stockcharts.com/scripts/php/candleglance.php?$IRX,$FVX,$TNX,$TYX|C|B14

Her er en bra graf for $TNX som er 10 års T-note, men jeg har ikke funnet tilsvarende gode grafer for andre varigheter.
http://finance.yahoo.com/echarts?s=%5ETNX#chart3:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

Jeg har funnet følgende graf hos Lånekassen der man kan se at flytende renter blir høyere enn lengre renter i Q1 2008. Inverted yield curve er jo som kjent et negativt signal for økonomi og børs:
http://www.lanekassen.no/Hovedmeny/Tilbakebetaling/Renter-og-gebyrer/Rentesatser/

Lånekassens renter for lengre varigheter er basert på statsobligasjoner, men med litt forsinkelse mellom observasjonsperiode og virkningsperiode. Det betyr vel sannsynligvis ikke så mye mht til å bruke grafen som en indikator for inverted yield curve.

Er det noen som vet om flere slike kurver der man kan følge med på forskjellen mellom lange og korte renter i en og samme graf? Det hadde vært fint å ha en kurve med litt finere oppløsning enn kvartalsvis:-)

[blaavass]

Sterke ord fra Ron Paul ved starten av 2010. Virker som at han frykter kollapsen i dollar kan komme ganske snart. Denne videoen kan bli en klassiker dersom fremtiden bekrefter hans spådommer.

http://www.youtube.com/watch?v=8h8NlNvlgnw&NR=1

[blaavass]

Nå har 10 years treasury bonds brutt opp gjennom det horisontale motstandsnivået på 3,86 (som nevnt i #51 ovenfor). Det blir interessant å se den videre utviklingen...

http://finance.yahoo.com/echarts?s=%5ETNX#chart3:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

[Cauldron2]

Hei ja, håper du hadde en fin påske?

Bra du holder denne tråden i live. Har vært stille her i påsken.

Ang. brudd opp, skal den ikke bryte opp mer enn en viss prosent før man i teknisk analyse kan kalle det et brudd? Det kan være falske signaler slik jeg har tolket det? (Hvis motstanden er på 4?)

[blaavass]

Påsken har vært super for min del, men med begrenset tid til børs. Er litt forundret over at det ikke er større aktivitet på dette forumet generelt. Trodde det var flere som var interessert i austrian economics, men det er kanskje bare vi som er sære?

Når det gjelder teknisk analyse, så er det alltid fare for falske signaler. Jeg vet ikke om noen spesiell %-sats som definerer et etablert brudd, men tror det er noen som opererer med det. En slik %-sats mener jeg må i så fall settes individuelt ut fra bredden på trading-rangen før bruddet, dvs avhengig av den spesifikke aksjens volatilitet på en måte.

Viktigste medisinen mot å hoppe på falske signaler, mener jeg er å først ha en fundamental begrunnelse for retningen. Deretter blir tekniske signaler timing'en for kjøpene.

Jeg foretrekker å kjøpe umiddelbart ved brudd opp, men f.eks. dele opp kjøpene. Ett kjøp kan gjøres ved selve bruddet opp, deretter kan neste kjøp gjøres ved tilbaketrekning til motstandsnivået som da er blitt et støttenivå. Dersom det bryter ned gjennom støttenivået, så kaster man kortene. På denne måten blir spread'en mellom kjøp og salg veldig liten og dertil lavere tap dersom trade'n går feil vei. Dersom trade'en går riktig vei, så vil man nesten hele tiden se positiv avkastning, noe som er godt for psyken. Dersom man kjøper etter en %-sats over motstandsnivået, så vil man se tap ved en normal tilbaketrekning til støttenivået. Ved brudd ned gjennom støttenivået med påfølgende stop-loss blir tapet ytterligere økt.

Nå gjør ikke jeg veldig mye kortsiktig trading, men jeg foretrekker å forholde meg til sluttkurser og gjør evt nedsalg helt på slutten av dagen. Har opplevd å kaste kortene tidligere på dagen for deretter å se at sluttkursen viste at det ikke ble brudd likevel. Neste dag fortsatte stigningen... Automatiske stop-loss kaster deg ut ved et intradag brudd selv om sluttkursen ikke viser brudd. Jeg liker derfor ikke å bruke automatiske stop-loss.

Ytterligere økning av posisjonen kan gjøres for litt langsiktige posisjoner ved tilbaketrekninger til 150 dagers glidende gjennomsnitt og bekreftet støtte ved at kursen vender oppover igjen. Dersom trenden er oppover er det lurest å kjøpe i tilbaketrekninger, buy low and sell high. Videre salgssignaler har jeg beskrevet i #5 i denne tråden.

[Cauldron2]

Mye tyder på at du hadde helt rett hvis man skal tolke denne artikkelen fra DN:

"Obligasjoner i faresonen: Selv obligasjonsmeglere stiller spørsmål ved å kjøpe obligasjoner nå."

"Prisene på amerikanske statsobligasjoner faller og rentene stiger i kjølvannet av den økonomiske gjeninnhentingen og den amerikanske sentralbanken Feds slit med å finansiere et massivt budsjettunderskudd."

http://www.dn.no/forsiden/borsMarked/article1872109.ece

[Outsourcingservice]

hey, you should use English so that everyone can understand.

[blaavass]

Ok Outsourcingservice, I’ll grant your wish and switch to English with hopes for more contributions from others:)

China’s peg of their currency to the dollar has been commented in earlier posts (#1, #4, #10, #11, #44, #50).

It seems like the trend of appreciating the Yuan compared to the dollar is continuing and might gather strength in the coming years.
http://www.dn.no/forsiden/utenriks/article1872441.ece

I’m not sure I understand all aspects of capital flows and currencies, but here is how I see it. Please comment if you think I’ve got something wrong.

When a Chinese company is selling merchandise to USA, they get paid in dollar. This company takes the dollar home to China and exchanges it for Yuan. If the central bank doesn't have enough Yuans, it will print new Yuan’s to cover the demand. This leads to increased money supply in China and inflation. Printing dollars in USA creates inflation in China…

When the capital flow is strongest in the direction of China, the central bank of China ends up with a quite big dollar reserve… This is not “wealth” in the hand of the central bank per se, but reflects the Chinese economy’s claim on USA. Having money in a fiat currency is like owning common stocks for the specific country’s wealth. If a country becomes bankrupt the money looses its value like a common stock looses its value when the company goes bankrupt. However, the central bank of China can loose money if the dollar looses value. The people holding the Yuan’s will gain money through increased purchasing power in dollar terms. I guess the central bank sets exchange fees to also cover currency risks, but more rapid movements will represent a hit on the value of the central bank’s dollar reserve.

Sending money out of China through exchanging Yuan’s for dollars and buying US treasuries is a way of lowering the dollar reserve and the pressure on the Yuan exchange rates and domestic inflation of money supply. This is also one of the reasons the Norwegian pension fund is investing all of the money outside Norway.

There are limitations on capital flows in and out of China, but they’ve opened up for foreign investments. This has been quite a smart move creating more stability in a developing economy, since a foreign investor can’t just take the factory and leave the country in case of problems in the economy.

Now that the Chinese economy is more developed, the limitations on capital flows are creating more and more problems. I think I’ve read that many companies in China have big savings. With a lot of money trapped inside China, the money is bidding up stocks and real estate within China and results in overinvestments in a range of assets. This is one of the reasons the Norwegian pension fund is investing all of the money outside Norway.

Big imbalances are building in China and my opinion is that only a free market can rebalance this in a proper way. I believe the Chinese government knows this, but they want to move slowly to avoid instabilities and social unrest. This means gradually more free capital flow and free Yuan exchange rates.

There seems to be a common view in the market that the Yuan will appreciate when allowed to float towards other currencies. I think that is inevitable on longer term, but I’m not so sure on shorter term. Capital that has been trapped in China might want to move internationally and that can temporarily result in downward pressure on the Yuan. (developments in floating currency exchange rates are showing us the capital flows in the world.) In the same way there might be downward pressure on different assets in China when capital is moving out.

After capital allocation has been rebalanced, a long term increase in the Yuan should follow reflecting the fundamental growth in the Chinese economy. A very important question is if the rebalancing will happen quickly or if it will take many years. I don’t know, but with the current state of affairs in the world, my guess is that the surprise will be on the short side.

[blaavass]

It is interesting to note that this gold shares index has been consolidating since early December 2009. It has corrected down to 150MA and then bounced up confirming the support. It looks like there’s a horizontal resistance level at 111/112. I would expect this level to be broken upwards at any time and this would be a great level for buying. Sell if it should break down through 150MA. Breaking to new high at 119/120 could be a great level for increasing the position and then again if it retracts back to the same level and confirms it as support level.

http://finance.yahoo.com/echarts?s=GLD#chart3:symbol=gld;range=2y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

Specific gold stocks can also give indications.

The US Gold Corporation (UXG) has had great action since February and has broken up through 150MA after a larger correction.
http://norma.netfonds.no//analysis.php?paper=UXG&exchange=A&from=20090203&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

The Lappland Goldminers (GOLD) has had a larger correction and might just be at the bottom of it. It is not unreasonable to expect something like the action of UXG quite soon. Note how perfect the stock behaves relating to 150MA as support or resistance.
http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

I believe GOLD would be a great buy when breaking up through 8 SEK. The position can be increased on reactions or when breaking 150MA.

(Disclaimer: I own both UXG and GOLD)

It is also interesting to observe that the gold price has broken up from an inverted-head-and-shoulder formation with neckline at approximately $1000. Then it has consolidated back for a while and now it seems to resume its ascent.
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=dmax

There are many discussions on gold as an inflation hedge or if it is a hedge against credit risk. Martin Armstrong says it like this in May 2009: “Gold is just starting to come into its own. Its role is obviously not the hedge against inflation as is stocks, but the hedge against the instability of government. For when all else fails, gold becomes the only store of wealth.”
Ref page 22 for the quote (page 24 of the PDF-file):
http://www.scribd.com/doc/15475184/Understanding-the-Real-Economy-51509

Here is a specific one on gold from Martin Armstrong, November 2009:
http://www.scribd.com/doc/22417671/GOLD-5000-11-11-09

If Martin Armstrong is correct in his view of gold as a hedge against instability of government, the future should absolutely be bright for gold in the coming years!

[blaavass]

A very good blog post:
http://boligkrakk.blogspot.com/2010/02/spot-on-fra-spetalen.html

...from a very good Norwegian blogger:
http://boligkrakk.blogspot.com/

[blaavass]

Outsourcingservice,

For you english speaking persons, I will recommend Google translater for reading previous posts. The result is quite ok, I think.

First page of thread translated to english:
http://translate.google.no/translate?hl=no&sl=no&tl=en&u=http%3A%2F%2Fwww.farmann.no%2Fforum%2Fshowthread .php%3Ft%3D5795%26page%3D1

Second page of thread translated to english:
http://translate.google.no/translate?hl=no&sl=no&tl=en&u=http%3A%2F%2Fwww.farmann.no%2Fforum%2Fshowthread .php%3Ft%3D5795%26page%3D2

[blaavass]

King World News is a great site with lots of interviews with knowledgeable people. I would say that many of those interviewed have austrian economics way of thinking.
http://www.kingworldnews.com/kingworldnews/King_World_News.html

Recently there have been two issues that can have serious impact on the precious metals market. The following links are to MP3 broadcast interviews by King World News.

1. Manipulation of the gold and silver markets by JP Morgan (30th March)
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html

2. Fraud, many more gold certificates (paper gold) have been sold than the amount of gold actually in the vaults. 100 to 1? (7th of April)
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html

If all of this is true, it can have major impact on the price of gold and silver. This could be a master trigger for huge price spikes.

Just imagine, this would be the equal of fractional reserve banking and bank runs.

When the world get worried that there is a fractional reserve gold market in operation, people will demand physically delivery of their gold as quick as possible. If it is actually true that there are only 1 ounce of physical gold for every 100 ounces of gold sertificates been sold, I assume things can get quite crazy in many ways. When the tide moves out, those bathing naked get exposed...

Gold is a financial commodity. Imagine a fractional reserve wheat market or a fractional reserve oil market. Insane?

[blaavass]

John Williams is the founder of Shadow Government Statistics Newsletter:
http://www.shadowstats.com/

Here is an interview with John Williams from 3rd of April this year:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/3_John_Williams.html

Already in the coming months he expects the US bond auctions to fail and the FED, as lender of last resort to the government, to start heavily monetization of the debt. This will bring the US into early phases of hyperinflation.

Williams mentions that for gold to reach the 1980 high of $850, it would now hit $2368 inflation adjusted. The same number would be $7494 for not seassonally adjusted inflation numbers.

If the world sees that US bond auctions are starting to fail and it gets clear that the FED is printing the difference, i.e. havily monetization, the world might start to discount monetization forever due to the extreme debt burden. This will be a huge pshycological shift in the perceived value of the dollar. You just migh get a "crack-up-boom" as Mises would call it, i.e. the start of hyperinflation.

[blaavass]

Ben Bernanke has not been as optimistic since the financial crisis struck. He is expecting things to slowly improve from here.
http://www.dn.no/forsiden/utenriks/article1872903.ece

This guy is reporting from the ground in California and is a reality check on Ben Bernanke's optimism. Note his comparison between California and Greece...
http://www.youtube.com/watch?v=oZZbhdkPBUI&playnext_from=TL&videos=gAx0s-9a24w

[blaavass]

In post #18 in this thread, I commented on the Norwegian economis Erik S. Reinert who insists that undeveloped countries need trade barriers until their industry is strong enough to be competitive on the world market. Otherwise it will just get wiped out by international competition and the country will import these goods instead with a following debt problem.

In this article Bill Clinton obviously has realised the same thing Reinert has stated for a long time.
http://www.dn.no/forsiden/utenriks/article1874724.ece
English translation:
http://translate.google.no/translate?hl=no&sl=no&tl=en&u=http%3A%2F%2Fwww.dn.no%2Fforsiden%2Futenriks%2Fa rticle1874724.ece

Haiti was earlier a large exporter of sugar. These days they're importing sugar, etc. Clinton comments that it was unfair of USA and the World Bank, etc., to pressure Haiti to open their economy for subsidized sugar from USA.

"It is unrealistic to expect a country to destroy its ability to feed themselves and just jump over a development step. It's almost ridiculous that we could believe it was possible", said Clinton.

[blaavass]

It is interesting to note that this gold shares index has been consolidating since early December 2009. It has corrected down to 150MA and then bounced up confirming the support. It looks like there’s a horizontal resistance level at 111/112. I would expect this level to be broken upwards at any time and this would be a great level for buying. Sell if it should break down through 150MA. Breaking to new high at 119/120 could be a great level for increasing the position and then again if it retracts back to the same level and confirms it as support level.

http://finance.yahoo.com/echarts?s=GLD#chart3:symbol=gld;range=2y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

Now the index has broken up through the 111/112 resistance level as expected and it will be interesting to observe the further development.

[blaavass]

This one really sounds like depression in the US:
http://www.youtube.com/watch?v=8L7Zrxf3e8o&playnext_from=TL&videos=QnV08CiW3Qs

[blaavass]

Great interview with Jim Chanos.

- Construction is 50 to 60% of GDP in China. which is an unprecedented number
- There is a giant property bubble that might pop in 2010.
- When the property bubble pops, the construction will stop and the GDP growth will go bad.
- When the property bubble pops, China will need their dollar reserves for taking hand of their banks...

http://www.charlierose.com/view/interview/10960

[blaavass]

Dr. Berninger who I mentioned in post #45 has now come with a specific warning that the commercial real estate market has started to collapse. Deflation will follow, but it is alway uncertain how long it takes before the market recognises it. However, he thinks it might be just days before the next financial crisis evolves.

Blog-post:
http://www.berninger.de/crisis-analysis-opinion/datum/2010/04/18/next-financial-crisis-is-about-to-emerge.html


http://www.youtube.com/watch?v=2i2-yChuowg&playnext_from=TL&videos=HeF9uSjhZRQ&feature=sub

[blaavass]

More details from Dr. Berninger:

http://www.youtube.com/watch?v=MGIa_CH99CY&playnext_from=TL&videos=qgspszDsbwo&feature=sub

[blaavass]

Good description of the property bubble in Singapore:

http://www.youtube.com/watch?v=dPd7VtVjmpg&feature=player_embedded

[blaavass]

Seems like the debt situation in the US is getting more acute every day:
http://www.zerohedge.com/article/us-treasury-pays-down-over-484-billion-bills-april-debt-roll-concerns-becomes-acute

If debt auctions start to fail, I guess things could happen very fast. My guess is that stockmarkets would fall sharply and bond yields would rise sharply. It will be interesting to see if gold surges immediately or if money first escapes mainly into cash. I would guess that money will try to escape the dollar, so at least gold will surge in dollar valuation. Money would also try to escape into the more sounder currencies creating high volatility in the currency markets. The Norwegian krone could become unplesantly strong...

[blaavass]

Dr Berninger's description of the coming crisis as "a crisis of alternatives" I believe is a good one. Even the safe gold may get caught in a sell-off. However, gold should come out well on longer term and if the market pshycology shifts to an escape into gold, it could turn out fantastic. In any case, I will expect high volatility. Gearing can be extremely dangerous.

http://www.youtube.com/watch?v=rbXwe0HZFH0&playnext_from=TL&videos=x9FsaVqgYWA&feature=sub

[Ingar]

Litt om hva jeg tror skjer i 2010. Hva tror dere?

Det som jeg tror kommer til å markere spikeren i kista for USA, er når Kina reduserer eller fjerner sitt peg mot dollar. Presset mot dette vil bli raskt sterkere etterhvert som det blir mer og mer tydelig at USA ikke kan betale tilbake gjelden sin med annet enn nytrykte penger. Kina og verden har allerede startet sin diversifisering ut av dollar. Denne prosessen vil aksellerere og da elimineres verktøyene som vedlikeholder peg'et, noe som gjør at peg'et må oppheves. Kina vil nok ønske at denne prosessen skal gå så langsomt som mulig slik at de får mest mulig penger ut av dollar før prosessen virkelig tar fart. Tror det er visse muligheter for at dette kan utsettes til 2011, men det kan selvsagt ikke utelukkes i 2010.

Det er forresten gode muligheter for skikkelig børskrasj i Kina også i 2010, siden de nok har alt for mye kapasitet. Tror ikke det innenlandske konsumet tar seg opp så raskt at det klarer å erstatte USA, etc. Vekst-tallene fra Kina tror jeg ikke er "riktige" per i dag.



Halloen!

Jeg er ny her på forumet. Jeg ser at det har vært mange kommentarer til denne, og jeg slenger meg på:

Tror det du sier om fremtidsutsiktene for RMBs peg mot USD er helt riktige. Kina vil gi slipp på peg'en, men forsøker samtidig å la det gå så sent at de får noe tilbake mens de selger unna fra reservene. 2011 kan være året RMB begynner virkelig å stige. Kanskje haler de det ut til 2012 eller 2013.

Jeg tror det du sier om kinesiske veksttall er feil. Jeg tror de kinesiske tallene er sånn noenlunde riktige. Tror ikke på noe crash i Kina. Tror på fortsatt, sterk og kanskje økende vekst her i mange mange år fremover. Jeg tror det eneste som kan fremprovosere et crash her, må være hvis selve USA går til grunne som stat. Da vil Kina bli kastet ut i resesjon men selv det vil bare bli kortvarig, et par tre år. Jeg tror ingen av dem som forutser crash i Kina fullt ut forstår dynamikken og kinesisk arbeids- og produksjonsliv. i må erkjenne at ingen av forutsetningene for bevegelse av arbeide og kapital slik vi kjenner dem fra Europa gjelder her. Kinesisk arbeidskraft er ikke veldig mobil, den er 100% mobil. Som vann omtrent, som vil renne mot det laveste punkt.

Ingar Holst
Shanghai

[blaavass]

Ingar,

It's interesting to hear from one living in China. Have you watched the videos of Jim Chanos that I've linked to in posts #22 and #79? What do you think about his arguments? It is not easy to see bubbles before they pop, and the closer you are to the bubble the harder it gets. Chanos has an excellent track record on spotting bubbles.

I believe that the growth in China will be great on longer term, but I still believe there could be a stronger correction in not too distant future. However, I expect the stock market correction to not last for more than a couple of years before the ascent continues. Of course, this depends on how the government is handling the situation.

What would start the stock market crash/correction would be declining prices in the property market with following reduced construction activities which again will have severe effects on the GDP of China.

If an economy has overinvested with borrowed money it doesn't help that the work force is mobile. Prices and investments will have to come down in any case. On longer term and for generating new growth, the mobility of the work force is of course very important.

[blaavass]

The Lappland Goldminers (GOLD) has had a larger correction and might just be at the bottom of it. It is not unreasonable to expect something like the action of UXG quite soon. Note how perfect the stock behaves relating to 150MA as support or resistance.
http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

I believe GOLD would be a great buy when breaking up through 8 SEK. The position can be increased on reactions or when breaking 150MA.


Now the GOLD stock has broken up through 8 SEK as I wrote about in post #70. I guess an exciting period is ahead:-)

[blaavass]

I might add that UXG is doing great too. It is now approaching ATH, which might be a great buying point:-)

http://norma.netfonds.no//analysis.php?paper=UXG&exchange=A&from=20090203&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

[Ingar]

Ingar,

It's interesting to hear from one living in China. Have you watched the videos of Jim Chanos that I've linked to in posts #22 and #79? What do you think about his arguments? It is not easy to see bubbles before they pop, and the closer you are to the bubble the harder it gets. Chanos has an excellent track record on spotting bubbles.

I believe that the growth in China will be great on longer term, but I still believe there could be a stronger correction in not too distant future. However, I expect the stock market correction to not last for more than a couple of years before the ascent continues. Of course, this depends on how the government is handling the situation.

What would start the stock market crash/correction would be declining prices in the property market with following reduced construction activities which again will have severe effects on the GDP of China.

If an economy has overinvested with borrowed money it doesn't help that the work force is mobile. Prices and investments will have to come down in any case. On longer term and for generating new growth, the mobility of the work force is of course very important.

You mention the stock market. I think the Chinese stock market is as close as you can get to an utterly insignificant marker of how the Chinese economy is doing. You might well have a crash in the stock market, I didn't count that in when I said crash as such. When I say crash, I mean something that impacts the growth. It is said that the Oslo Stock Market is the world's largest bingo hall, but the Chinese stock market is even more out of touch with economic realities. it is not A bubble as such, it is more like continuous foam. I never look to the (Chinese) stock market when I look at the Chinese economy. The Chinese stock market is populated by souls that had they less money you would find them in the back alleys on hot summer evenings playing mah jong for tens and ones. The rules of the game would be identical. Chinese companies hardly ever rely on the stock market to access capital. If a Chinese company is serious about anything, it will not look to that market. The huge semi-governmental corporations are listed of course, but mostly for show. So, my attitude has always been, forget the Chinese stock market. It will go up and down like a ping pong ball. Nobody pays much attention to it, unless one has gambled oneself.

the same with the real estate market. It also more resembles foam, up and down, violently. People watch it for bets and entertainment. The bets are apartments. People will buy five or ten at a time for fun.

In China I would look to commodities. I would look to forex, if I should look at serious indicators about the Chinese economy. And I would compare those to real life (tm) around me to get an overall impression. Most importantly one needs to understand that because the RMB is so insanely underrated, any comparison with the outside world must be done considering purchase parity. Comparing mere numbers by themselves do not tell you anything.

Let me give you the sort of observations that tell me that China wil continue to grow double-digit for as long as we, our children and our grandchildren are around:

(1) When I first got here in 1986, the only way to travel to another city was by airplanes. There were literally no intercity roads. There were mud-trails with donkeys and tractors in some areas. In the course of the last twenty years China has built the longest and the best highway system in the world, surpassing in length and quality the highways of countries like Germany and the US:

http://en.wikipedia.org/wiki/Expressways_of_China

(2) My maid is illiterate. Her three daughters are all in university. I know an additional five middle-aged women here that are illiterate. (All of them come from rural Anhui, in Europe that equals that you are a gypsy from the Romanian boondocks.) They all have kids. All their kids attend university. All of them.

(3) All my friends whom I have seen relocating into Shanghai from other provinces, absolutely every one of them, were desperately poor upon arrival. These are a great many people, more than twenty. Some showed up at the railway station in the winter with no shoes. Some begged the ticket money at the departing station. None of them had seen a shower or a toilet until they got here. All of these people, every one of them, now my close friends, used from three to five years to find a life, meaning a decent place to live, a decent career. We are talking about people who lived in shantytowns who start companies, work for three to five years and then go on to buy mortgage-free penthouses, cars, and those ridiculous French hats. Most of them are today much better off than I have ever been.

The above are the markers you should look for and observe closely. Forget about the stock market and real estate, those are for players. I have seen so many Chinese always being able to land on their feet. No matter what happens they always turn any situation to their advantage. Europe is hopelessly behind. The US is a joke. Correction, the US is a _former_ joke.

The living standard in Shanghai among just ordinary people is already way way above the Norwegian average. It will surpass, or it might even be surpassing as we speak, the final pockets of wealth previously superior to China, as some of the largest cities in Switzerland and Japan, and some of the Arab oil exporting states.

Forget the numbers. Look at reality.

The only thing that can prevent China from growing at a double-digit pace for more than another hundred years will be a war with a major military force, like the US. A nuclear war with the US, yes, that will prevent China from growing. But nothing short of that will.

Ingar

[Ingar]

Great interview with Jim Chanos.

- Construction is 50 to 60% of GDP in China. which is an unprecedented number
- There is a giant property bubble that might pop in 2010.
- When the property bubble pops, the construction will stop and the GDP growth will go bad.
- When the property bubble pops, China will need their dollar reserves for taking hand of their banks...

http://www.charlierose.com/view/interview/10960

I have just looked at the Chanos interview. I think I understand why he says what he does. His math is first of all flawed when it comes to understanding typical Chinese income, what it is and where it comes from.

Let me give you an example:

My physician. Dean of a medical faculty, professor of medicine. His salary is 5000 rmb / month. His mortgage is 7000 rmb a month. Obviously this is not sustainable in Chanos' eyes. In order to understand my physician, you need to understand that his salary is only a small part of his total income, and failing to observe that is one out of several core misunderstandings almost all Western analysts commit when they look at the housing situation in China.

Another core misunderstanding in Chanos' argument is based on his observation that while China on the one hand has a huge segment of its population lacking adequate housing, living in shanty-towns in the best case, and that the same country on the other hand is mass-constructing high-end condos, this doesn't add up. Well, it wouldn't add up any other place, but consider the following:

A huge portion of people now moving out of the shanty-towns do that precisely because they suddenly acquire the wealth not only to buy a middle-class home, but to acquire precisely high-end condos.

Consider the ones that do _not_ rise to wealth so quickly: They are the ones that are buying every time some individual bubble of the housing foam bursts. This does not impede growth, it causes further growth. This is where the Chinese housing foam is so very different from the US housing bubble, where there will be no buyers right after a burst. Here there are plenty of buyers, all the time. After a local burst, you just get some other segment buying.

For these three reasons (1, the typical Chinese income structure is underappreciated, 2, the typical Chinese class mobility is misunderstood, and 3, the impact of the size of the population is underrated), a bubble bursting in the Chinese real estate market does not impact growth the way it would have in a Western country, if at all.

Ingar

[blaavass]

Ingar,

Here are some guys that know China closely:

1. Marc Faber:
http://www.businessweek.com/news/2010-05-03/china-may-crash-in-next-9-to-12-months-faber-says-update3-.html

“Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.”

2. Michael Pettis:
http://www.dn.no/forsiden/utenriks/article1875946.ece
“China holds the largest trade surplus in history. History's third largest surplus was U.S. in 1929, and that went really wrong. The second largest was Japan in 1987 and that went really wrong too. China had history’s largest surplus in 2007, and Pettis think it will again go wrong.”

Michael Pettis blog:
www.mpettis.com

3. The Chinese professor Yu Yongding:
http://www.smh.com.au/business/chinas-runaway-growth-train-on-a-dangerous-course-20100124-msll.html

"When a country has an investment rate over 50 per cent [of] GDP and rising, you say this country is not suffering from overcapacity! … are you serious? ''To judge whether there is overcapacity you cannot just do a head account. With a 1.3 billion population and human greed, China's needs are unlimited, you can say that China will never suffer from overcapacity!"

"There is sort of a chase - demand chasing supply and then more demand is needed to chase more supply," he says. "This is of course an unsustainable process."

"So there are now airports without towns, highways and high-speed railways running parallel, and towns where peasants are building houses for no reason other than to tear them down again because they know that will earn them more compensation when the local government inevitably appropriates their land."

[blaavass]

Ingar,

Thank you for contributing to the discussion. Not sure why, but not too many others have.

You said that the salary of your physician is only a small part of his income, but where is the biggest part of his income coming from? Is he flipping condos?

I believe the long term future for China most likely will be great, much for the reasons you have mentioned. Jim Rogers has compared China in 2007 with USA in 1907. Despite the 1929-depression, wars and stock market crashes, USA grew to the biggest economy in the world. qqqqqHowever, he also believes that along the way there will be terrible market periods in China too.

Sorry to say that your arguments have mostly supported my skepticism about China on the short term. Here is why:

1. You said “A huge portion of people now moving out of the shanty-towns do that precisely because they suddenly acquire the wealth not only to buy a middle-class home, but to acquire precisely high-end condos.”

My view is that it is not normal that many poor people suddenly become very rich. It reminds me a lot about the dot-com era, where post officers quit their regular job and were going to speculate full time in the stock market.

When you’re investing in a bubble market in the bull phase, everything you do will turn out right and you feel like a genius. Those who leverage the most, becomes the richest and most successful. The only problem is that when the market turns, you are suddenly wiped out.

This is exactly what happened in Enron. Don’t you think a prudent person in Enron would be told by his boss; “Look at the numbers, look at reality! All your colleagues are earning much more than you are. You need to learn from them or quit!” Also, year after year his colleagues earned huge bonuses, while he got only the standard bonus…

2. You said that “The living standard in Shanghai among just ordinary people is already way way above the Norwegian average.”

Isn’t this quite strange? Norway is selling oil, fish and quite a lot of technology. The profit we only have to split on 4 million people. China has to import a lot of the commodities and they are selling low-end products. This smells like a bubble to me…

3. You said that “The only thing that can prevent China from growing at a double-digit pace for more than another hundred years will be a war with a major military force, like the US. A nuclear war with the US, yes, that will prevent China from growing. But nothing short of that will.”

Do you know of any country in the world ever having experienced double digit growth for more than a century? This sounds like a “new era” argument, extrapolating the current situation and concluding that everything will grow into the sky.

[Ingar]

Ingar,

Here are some guys that know China closely:

1. Marc Faber:
2. Michael Pettis:
3. The Chinese professor Yu Yongding:


I am aware of all of them. Let's see. I have stuck my neck out. Shall we make this bet a little more tangible? So we say that these guys combined say that China will crash within... when? And by crash we mean... precisely what? Which indicators will change at least how much for at least how long?

I suggest that we measure by GNP. By a crash China's GNP should not exceed... which percent? And for more than... how about for more than a year? And a crash, should we say negative growth? Negative GNP growth for at least one year? That would be one crash. I say this will definitely not happen. Or is negative GNP growth too harsh? Should we say that if China's GNP falls below 4% for at least one year, that this counts as a crash? I don't think that will happen either.

My prediction for a worst case scenario for China is that we might see growth intermittently dipping to between 5 and 6 percent, but not for more than 3 months. This is in my view the absolutely worst case scenario.

My most likely scenario says that China's growth will not dip below 9% at any month and that the average annual growth for the next ten years will be double digit.

I have to give you the handicap that I have taken great interest in predicting Chinese economic indicators in the past, and I have _never_ been right. Haha!

Winner treats loser to a cold beer at the 88th floor restaurant in Jinmao Tower? You need to remind me when you think the bet has been won or lost. My contact info:

http://contact.ahyp.no/

Ingar

Ouch. It should of course be LOSER TREATS WINNER.

[Ingar]

Ingar,

Thank you for contributing to the discussion. Not sure why, but not too many others have.

You said that the salary of your physician is only a small part of his income, but where is the biggest part of his income coming from? Is he flipping condos?

I believe the long term future for China most likely will be great, much for the reasons you have mentioned. Jim Rogers has compared China in 2007 with USA in 1907. Despite the 1929-depression, wars and stock market crashes, USA grew to the biggest economy in the world. qqqqqHowever, he also believes that along the way there will be terrible market periods in China too.

Sorry to say that your arguments have mostly supported my skepticism about China on the short term. Here is why:

1. You said “A huge portion of people now moving out of the shanty-towns do that precisely because they suddenly acquire the wealth not only to buy a middle-class home, but to acquire precisely high-end condos.”

My view is that it is not normal that many poor people suddenly become very rich. It reminds me a lot about the dot-com era, where post officers quit their regular job and were going to speculate full time in the stock market.

When you’re investing in a bubble market in the bull phase, everything you do will turn out right and you feel like a genius. Those who leverage the most, becomes the richest and most successful. The only problem is that when the market turns, you are suddenly wiped out.

This is exactly what happened in Enron. Don’t you think a prudent person in Enron would be told by his boss; “Look at the numbers, look at reality! All your colleagues are earning much more than you are. You need to learn from them or quit!” Also, year after year his colleagues earned huge bonuses, while he got only the standard bonus…

2. You said that “The living standard in Shanghai among just ordinary people is already way way above the Norwegian average.”

Isn’t this quite strange? Norway is selling oil, fish and quite a lot of technology. The profit we only have to split on 4 million people. China has to import a lot of the commodities and they are selling low-end products. This smells like a bubble to me…

3. You said that “The only thing that can prevent China from growing at a double-digit pace for more than another hundred years will be a war with a major military force, like the US. A nuclear war with the US, yes, that will prevent China from growing. But nothing short of that will.”

Do you know of any country in the world ever having experienced double digit growth for more than a century? This sounds like a “new era” argument, extrapolating the current situation and concluding that everything will grow into the sky.

In quite a few fields, salaries in China are quite low compared to the US or Europe. A surgeon or a professor may have a salary less than ten percent of his US or European counterpart. Lets take these two guys, the surgeon and the professor, as examples. It is customary that when facing elective surgery, the next of kin, a spouse, a son or a daughter, a parent, will meet with the surgeon before the procedure. Officially the meeting might be scheduled under phrases like "information", but what will happen, without fail, is that a huge fat envelope will change hands. The surgeon will never ask for this and will probably try to deflect the movement of the envelope into his own hands with pretended embarrassment, but the next of kin will be sure to be more persuasive than the deflection, according to the local culture, much like two friends amiably quarreling in a restaurant about who gets the honour of settling the bill. I will, no, no, no, allow me! Et cetera. The envelope might typically contain the equivalent of two or three months' worth of the salary of the patient's next of kin. This is to say, "I place my dear one in your hands". If the procedure is a matter of life and death, we could see sums up to one year's salary of the next of kin. If it is a routine procedure, it could be a couple of thousand RMB only, as a gesture. If the family in question is obviously very poor, it could be a couple of hundred only, and it would not be comme-il-faut to hint that the money is too little. In this situation a subtle and mutual understanding of all factors prevails. If the surgeon deems the risk of the procedure to be high, he might totally refuse the envelope and perhaps accept it afterwards, if the patient lives. Sometimes there is an envelope before and after the procedure. So, even if the average salary of a surgeon might be something like 5000 RMB, most surgeons in the large cities along the eastern coast have a purchasing power not less than a surgeon in the US or in Europe of comparable skill, but mind you, only the 5000 will be counted and measured by national statistics.

Let us take the professor: The average salary for a professor at any university in the big cities along the east coast might also be about 5000 RMB a month. Far less than ten percent of his US or European counterpart. Likewise, the professor has numerous additional venues: Whenever a student hands in a thesis for comment, approval or final suggestions, it is also customary that an envelope changes hands. For a Master thesis, about 500 RMB. A professor might supervise 50 thesis-writing students each term. Whenever the professor holds a lecture outside his own university, there will also be an envelope. While a professor of any discipline might not have all the venues of the surgeon, we may safely assume that his monthly salary is not a significant portion of his total income, but only his monthly salary will be counted and measured by national statistics.

The above are only two professions, but every profession has its side-venues. My relative works in the Party, in an office in charge of keeping in touch with and taking care of the needs of visiting overseas Chinese. Her salary is 3000 RMB a month, not much on the face of it. Every year she goes somewhere though. Last year she went with her son to Norway for two weeks. The year before that she went for several weeks to Europe, Germany, Austria, Italy, Poland. Stayed in 5 star hotels, ate in Michelin restaurants. The year before that some weeks in Malaysia. As a state employee, she has a housing grant sitting in the bank, worth perhaps half a million RMB, and an education grant for her son, also sitting in a bank account, worth more than hundred thousand RMB. These accounts belong to the Party, and the Party also is paying for all the holidays and the other fringe benefits. She has not used the housing grant yet, as she bought her apt with her own funds. This means she can use the housing grant for a second home, for redecoration, or for anything else. The student grant account for her son's future studies also appears to be fully disposable, almost like a free credit account. Often the source of income for all this welfare is not the state budget, as the Party might sometimes have business relations on its own with exterior units.

If we look at the PLA, we find the same pattern. What is allocated to the PLA over the state budget is only one part of the PLA income. Each regiment might have factories, retailers, and hefty export or at least sales revenues in their own right, and none of that is counted in the defence budget.

The idea here is, that one cannot judge the Chinese economy by looking at official numbers. They do not tell you much about reality. As a rule of the thumb, the real numbers in any sector of the Chinese economy are two or three or four times larger than what official statistics indicate.

The growth of the Chinese economy is also greater than what the official figures indicate. The total amount of money in any sector is greater than whichever figures you will be able to find. In addition we already agree on that the RMB is insanely underrated. Combined this makes the case for that China might already be the biggest economy in world.

My gut feeling is that this is sustainable. This is just my gut feeling.

[blaavass]

Thanks for your elaboration and sharing of information, it is very interesting to hear about the non-official side and I see that you have a point in the understatement of salaries in public statistics.

Unfortunately, none of us has of course the divinity of predicting the future. However, I remain cautious in the short-term future, except for my portion of gold stocks:-)

By the way, I noticed that Dagens Næringliv has also picked up on Marc Faber's latest prediction about China.

http://www.dn.no/forsiden/utenriks/article1891491.ece

[Ingar]

Ingar,


Sorry to say that your arguments have mostly supported my skepticism about China on the short term. Here is why:

1. You said “A huge portion of people now moving out of the shanty-towns do that precisely because they suddenly acquire the wealth not only to buy a middle-class home, but to acquire precisely high-end condos.”

My view is that it is not normal that many poor people suddenly become very rich. It reminds me a lot about the dot-com era, where post officers quit their regular job and were going to speculate full time in the stock market.

When you’re investing in a bubble market in the bull phase, everything you do will turn out right and you feel like a genius. Those who leverage the most, becomes the richest and most successful. The only problem is that when the market turns, you are suddenly wiped out.

This is exactly what happened in Enron. Don’t you think a prudent person in Enron would be told by his boss; “Look at the numbers, look at reality! All your colleagues are earning much more than you are. You need to learn from them or quit!” Also, year after year his colleagues earned huge bonuses, while he got only the standard bonus…

2. You said that “The living standard in Shanghai among just ordinary people is already way way above the Norwegian average.”

Isn’t this quite strange? Norway is selling oil, fish and quite a lot of technology. The profit we only have to split on 4 million people. China has to import a lot of the commodities and they are selling low-end products. This smells like a bubble to me…

3. You said that “The only thing that can prevent China from growing at a double-digit pace for more than another hundred years will be a war with a major military force, like the US. A nuclear war with the US, yes, that will prevent China from growing. But nothing short of that will.”

Do you know of any country in the world ever having experienced double digit growth for more than a century? This sounds like a “new era” argument, extrapolating the current situation and concluding that everything will grow into the sky.

To your last point first, China is indeed a "new era" case. Allow me to dive into this:

In the post-war era, in the 60s and 70s, when production slipped out of the US and Western Europa and found its way to Japan and South Korea, this phase lasted a mere twenty years before costs soared in those countries again, and as growth levelled production once again was relocated, to Singapore, Taiwan, Hong Kong and Thailand. Now these countries are being outcompeted by Vietnam and the eastern seaboard of China, but what will happen when costs soar and growth levels also here?

The first thing one should keep very firmly in mind when discussing cost soaring and growth levelling, is that China is not at all comparable to any other country having gone down this road, as China has an abundance of cheap labour in its interior. As we speak, China's rural population counts roughly one billion people. During the next generation, they will face an automated agricultural sector replacing them and they will continue their present drift to the cities along the East Coast. Shanghai is a case in point: In 1986, Shanghai had a population of 13 million. Now we have 25 million, and twenty years from now this city might count 40 million people. The bottom line is that China will for the foreseeable generations have an unlimited supply of cheap labour. This is where China is different from Japan two generations ago, and from South Korea, Taiwan, Hong Kong and Singapore one generation ago. It is not possible to appreciate the growth potential of China without acknowledging that China will have a virtually unlimited supply of internal cheap labour also beyond one hundred years from now.

When costs soar in Shanghai, when production growth levels here, it is not being lost to some even more remote country not yet having been developed, production is merely being relocated from Shanghai to Southern Jiangsu and to Zhejiang. This happened eight to five years ago. When growth levels and costs soar in Southern Jiangsu and Zhejiang, production is relocated to Northern Jiangsu and Anhui. This will happen two or three years from now. As industrialization moves inwards, profit is relegated in the opposite direction, generally eastwards, supporting the tertiary industries. You have to take into account the immense size of the Chinese interior before starting to make guesses at when China will hit its growth ceiling. I think it would be more realistic to forecast that China will see continuous double digit annual GNP growth for the next three hundred years rather than for the next hundred years.

Ingar

[blaavass]

I think we agree that the future for China most likely is great for the coming century. However, I don’t think anything is going in a straight line (or exponentially in double digits) without some serious bumps along the way. I believe that there is a significant risk for bumps in the not too distant future and therefore I stay cautious and mostly out of the stock markets.

I just noticed your other post about a bet. If I’m in China I’d love to buy you a bear for a good discussion. I’m not really advocating that I’m able to predict the future accurately, so betting is not quite relevant.

I’ll give you an example of my way of thinking. In March 2007 I took my family’s money out of the stock market and over in secure and short term interest bearing papers. Not because I thought I knew exactly what was going to happen, but because the stock market was high and I thought there would be a significant chance of some trouble in the stock market. My perspective was to wait three years before entering the stock market again with this money. When the stock market crashed in 2008, I would normally have entered the market again at approximately a 50% drop. However, I don’t think this is a normal correction and therefore I have stayed out with this money. History will show if the second choice was as good as the first. See the following graph on why I don’t think this is a normal correction. My thinking is on probabilities rather than accurately predicting the future.
http://www.gold-eagle.com/editorials_08/hickel112108.html

I still think there is a significant probability of trouble in the stock markets and economies around the world in near future, including the emerging economies, including China. Also, people that I follow and who have a good track record, seems to be worried about further market turbulence. Therefore I stay cautious and I’m waiting for opportunities. If a stronger correction comes in the stock markets, I want to move money into stocks in emerging markets (as I mentioned in the beginning of this thread).

[blaavass]

Lappland Goldminers (GOLD) is looking good technically. I mentioned the buying point when breaking up through 8 SEK. Next buying point will be if it turns up again after testing 8 SEK from the upside, which can happen already in the coming day. Then further buying can be done on breaking up through 150 MA and on corrections back to 150 MA.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[Ingar]

I think we agree that the future for China most likely is great for the coming century. However, I don’t think anything is going in a straight line (or exponentially in double digits) without some serious bumps along the way. I believe that there is a significant risk for bumps in the not too distant future and therefore I stay cautious and mostly out of the stock markets.



Oh, I would stay out of the stock market too. The stock market will predictably be very very bumpy. What I am saying is, this will not affect growth.

Don't take my bets too seriously, I don't. They're just for fun.

[Ingar]

I still think there is a significant probability of trouble in the stock markets and economies around the world in near future, including the emerging economies, including China. Also, people that I follow and who have a good track record, seems to be worried about further market turbulence. Therefore I stay cautious and I’m waiting for opportunities. If a stronger correction comes in the stock markets, I want to move money into stocks in emerging markets (as I mentioned in the beginning of this thread).

Here is a glimpse into what I must assume to be the official Chinese view on the real estate market, for what it is worth:

http://www.chinadaily.com.cn/china/2010-05/06/content_9814091.htm

In short, no crash, just momentary levelling. And then after half a year or nine months, further growth.

Ingar

[blaavass]

Ingar,

Did you notice the following quote in the article you linked?:

"If we do see a pretty serious correction in the property market, banks' balance sheets will likely be severely impacted and this could at some point, necessitate bailouts," Charlene Chu, a senior director at Fitch's financial institutions ratings team in Beijing, said on a conference call.

"The problem is there is a very high indirect exposure to the property market, mainly through corporates who have taken out loans and used that money for property investments or developments of their own," Chu said.

You should normally not listen to officials. The article sounds much like USA in 2005, 2006 and 2007:-)

http://www.youtube.com/watch?v=9QpD64GUoXw

http://www.youtube.com/watch?v=EoB4BS7CGAw

http://www.youtube.com/watch?v=ER2JU2UOevE

http://www.youtube.com/watch?v=AFR7mZynY90

http://www.youtube.com/watch?v=Z0YTY5TWtmU

[blaavass]

http://www.youtube.com/watch?v=WE-lCMPuHz4&playnext_from=TL&videos=u8vGBMUUqL0

[blaavass]

It sounds like Romania is one of the few countries doing the right thing for the longer term.

http://www.nettavisen.no/nyheter/article2899451.ece

The article says that instead of increasing taxes (mva, etc), Romania is cutting spending drastically. I guess they will experience larger short term pain, but they'll reduce the burden on their economy such that it can more easily grow in the future.

Romania is also cutting wages for government workers. Most likely, the wage cuts will replace a lot of layoff. Again, they are doing the right thing for the longer term and not avoiding the short term pain.

I guess more or less all countries in the world will increase taxes in coming years instead of cutting costs enough, ref Australia which has recently put in place an extra profit tax on natural resource companies.

[blaavass]

Interesting events are going on in the markets these days and it seems like the turmoil has started to unfold.

Value of currencies shows how capital is flowing in the world. The dollar index has been surging sharply, and stock markets have corrected sharply. That means that money is flowing from the stock market into cash and it means money is flowing from Euro to Dollar.

Dollar index:
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=dmax

However, gold is rising sharply in dollar terms and might even start skyrocketing upwards. This means that also the Dollar is going down in value, it’s just that the Euro goes down even faster.

Gold price:
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=dmax

At the same time gold stocks seems to get hit by the sell-off in the stock markets despite the gold price going up. However, if the gold price stays strong, the gold stocks will have to follow after a while.

Lappland Goldminers:
http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14


The money supply has tightened lately, but it will be interesting to follow the money supply to see if the FED starts throwing even more money at the problems. As long as the money supply continues to go down, stock markets are in for difficult times.
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

It is also interesting to follow the inter bank interest rates, which have gone up significantly during the last day. If they continue to rise, money will be tight and stock markets will be in even more trouble.
http://www.norges-bank.no/templates/article____55480.aspx

[Ingar]

Blaavass said:

: "If we do see a pretty serious correction in the property market,
: banks' balance sheets will likely be severely impacted and this could at
: some point, necessitate bailouts," Charlene Chu, a senior director at
: Fitch's financial institutions ratings team in Beijing, said on a conference
: call.
:
: "The problem is there is a very high indirect exposure to the
: property market, mainly through corporates who have taken out loans
: and used that money for property investments or developments of
: their own," Chu said.

Yeah, I saw that. I disagree. My fundamental belief is that there is a shortage of housing in China and will be for the next two or three generations. I believe the present Chinese real estate market and infrastructure development sector is a healthy, sustainable one, and allowing for the odd up and down of any free market, property prices in Mainland China is going to increase steadily for as long as we dare to peep into the future. I think prices should double each three to five years from now on for quite som time ahead.

I think the corrections that will come will largely manifest themselves as increased _diversifications_, i.e. that modest dwellings in suburbia will drop slightly before raising again or stabilize momentarily, while the hot spots will continue their frantic ascension, also for as long into the future as we dare to peep.

Ingar

[blaavass]

I've repeatedly referenced Niall Ferguson in this thread. Yesterday, he spoke at a conference in Norway and his message was quite pessimistic.

In essence, he thinks/fears that Greece will default on its debt payments and that will trigger a banking crisis in Europe much like the American banking crisis in 2008. He thinks the collapse is just around the corner, maybe not more than 2 weeks away. (I'm referring information from the article in the Saturday paper version of the newpaper Dagens Næringsliv, which was more extensive than the article on Internet.)

http://www.dn.no/forsiden/borsMarked/article1895296.ece

Translated to English:
http://translate.google.no/translate?hl=no&sl=no&tl=en&u=http%3A%2F%2Fwww.dn.no%2Fforsiden%2FborsMarked%2 Farticle1895296.ece

[blaavass]

Bankrupt and indebted countries are borrowing more money as a rescue? How can that be a successful strategy?:

"- No one have money available to put into the new fund. Money must be borrowed in the bond market and will likely be invested through government bonds. Thus, we have very little more than a paper transaction, writes Handelsbanken Capital Markets in its morning report.

The European Central Bank ECB will also purchase both government and private bonds when it will be necessary, but purchases will not increase the money supply. The ECB also resume temporary swap lines with the Federal Reserve and the dollar liquidity measures, so that first occurred in the financial crisis.

- We shall protect the euro by any means, "said the Finnish EU Commissioner Olli Rehn."

http://www.na24.no/article2901005.ece

I guess EU is now playing poker with the currency markets through the enormous bailout and has now gone "all in". I'm not sure they can afford to loose that bet.

http://www.youtube.com/watch?v=F7YKFgARq2Y&playnext_from=TL&videos=nNAgDtf7EWM&feature=feedu

But can they really succeed in bluffing the market?

http://www.zerohedge.com/article/jim-rickards-goldman-can-create-shorts-faster-europe-can-print-money

Together with the dollar index the gold price is telling its own story by setting all-time-high...

http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=d12

[borte_vekk]

@blaavass
I agree with many things you are saying and are also worried that not many people are aware (or dont care) about what is happening. We are throwing good money at bad BIG time.
In the past 10 years uptil now,all the people that were saving money, not borrowing through the roof, thinking ahead of a rainy day are now bailing out the ones that did the opposite. You are being punished for doing the right thing and rewarded for being reckless. Even in yesterdays news the prime minister states that there might be need of more bailouts in Norway if need be. I dont have words for this but my first reactions are shocked, furious and pissed off (pardon my french). Spending tax payers money (i.e. my money) on rewarding speculators that failed big time is beyond me. To say the least im disgusted by it. And this is going to keep on until all the gunpowder is used. How long I have no idea, I thought in 2009/2010 it was going to bust but here is the problem, we are totally underestimating the will and determination of the governments and central banks to keep this going ( or keep it floating) at any prize. We see this in the latest €900 Billion bailout package from EU. They are blaming capitalism and speculators for this mess but when in reality it is their own mess. In basic they have spent alot more money then they had, and now they cant pay it back, simple as that. But for politicians it is alot easier to blame someone else.

That is why I am only in gold at the moment, started buying over a year ago in Lappland Goldminers. Silently buying more these days just below 7SEK.

I saw you mentioned astrocycles earlier. have you had a look at Merriman (www.mmacycles.com). Its really an interesting supplement to other Technical analysis. Here is something he wrote in his weekly column on the 24th April : "here is something else to watch for. Mercury is retrograde April 19-May 11. The middle of that period can also coincide with a market reversal, +/- 2 trading days. That equates to Thursday, April 30. The rule is that any market that did not reverse around the time of the retrograde date will usually have a sudden turn around the middle of the retrograde period. It is very rare that a market makes it all the way through Mercury retrograde without a reversal of some importance."

And we now what happened the following week.

In his weekly preview on the 1st of May : "Another geocosmic factor to watch for this week is the entrance of heliocentric (not geocentric) Mercury into Sagittarius, May 6-17. This is a signature of sharp price moves, especially in precious metals, and usually upwards, for at least 3-9 trading days. Usually it is not so bullish for stocks."

Gold price reaching all time high yesterday :)

He writes a book every year forecasting the following year, and in every book since the early nineties
he has written about "the cardinal climax" that was goin to unfold in 2008 and lasting 2015-2018.
This a special planet configuration that happens not very often, last time was in 1929.
Anyway its an interesting book and recommended.

Observing $ and goldprice going the same way, interesting times indeed we are living in :)
Keep up the good work and please keep this thread alive.

[blaavass]

Thanks for the tip, I'll check out Merriman:-)

Here is a great speech/lecture by Peter Schiff now in May:

http://www.youtube.com/watch?v=bzbA8nT4j9g&feature=PlayList&p=D336CC90A5C3E7FD&playnext_from=PL&index=90

[blaavass]

By the way, here are some great speeches/lectures by Peter Schiff over some years. I'm quite impressed on how consistent his message is over such a long period.

Money Show in February 2006:
http://www.youtube.com/watch?v=sDh3FNuwrTc&feature=PlayList&p=D336CC90A5C3E7FD&playnext_from=PL&index=59

Money Show debate in May 2007:
http://www.youtube.com/watch?v=dWoRF64jibk&feature=related

Mortgage Bankers speech in November 2006:
http://www.youtube.com/watch?v=jj8rMwdQf6k&feature=PlayList&p=D336CC90A5C3E7FD&playnext_from=PL&index=83

Mieses Institute in March 2009:
http://www.youtube.com/watch?v=EgMclXX5msc&feature=PlayList&p=D336CC90A5C3E7FD&playnext_from=PL&index=74

The Authors@Google program April 2009:
http://www.youtube.com/watch?v=tU8jCa_dKTM&feature=PlayList&p=D336CC90A5C3E7FD&playnext_from=PL&index=78

[blaavass]

Ayn Rand wrote the book "Atlas Shrugged" in 1957. The book is a story integrating her philosophy emphasizing individual rights and laissez-faire capitalism, enforced by a constitutionally limited government. Individual business entrepreneurs are the heroes in the book, and the positive effects from rational self-interest might be the purest essence of the book.

Her background/experience is from Russia where she observed the effects of communism.

http://en.wikipedia.org/wiki/Ayn_rand

http://en.wikipedia.org/wiki/Atlas_Shrugged


Here are some fascinating quotes:

“Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.”

--Ayn Rand in "Atlas Shrugged"


“Government ‘help’ to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.”
--Ayn Rand

[blaavass]

I believe we are now experiencing some very important psychologically shifts in the markets.

1. Through the situation in Greece the bond market has woken up to the real possibility of government defaults. The effect is that lenders are demanding higher interest rates. In April 2010 the yields on Greek government two-year bonds rose to 15.3% following the downgrading to “junk” status by Standards & Poor’s.

2. The market has woken up to gold being a currency of its own, instead of just being an asset with no yield. A monetary premium has started to be included in the price and focus is more on the safety of owning physical gold.

http://www.dn.no/forsiden/borsMarked/article1899246.ece

3. After EU launched the rescue package, the market has woken up to the danger of inflation due to debasement of currencies and money-printing. Weakening currencies compared to the Chinese Yuan will result in higher import prices of consumer goods, which might show up quite fast in the CPI of western countries. If the CPI starts to rise under the condition of high unemployment, this could further shift the market’s understanding of inflation and the inflation can start to feed on itself.

http://www.dn.no/forsiden/utenriks/article1895894.ece


These three forces are interrelated and can feed on themselves for quite some time. A rising gold price strengthens the impression of weaker currencies and makes the market expect higher prices (price inflation). Price inflation strengthens the demand for higher interest rates and higher gold price. Higher interest rates on government bonds forces countries to either default or print money, which is strengthening the gold price and contributing to price inflation through debasement of currencies, etc, etc.

All this can take some time, but I think there is a real possibility of things happening quite fast. Just imagine what would happen if USA defaults on debt payments, or if it is revealed that the FED is secretly buying large amounts of government debt, or if debt auctions starts to fail, or if long term interest rates starts to rise sharply...?

[blaavass]

Ron Paul also impresses me on his understanding of economics and consistent message over soooo many years.

http://www.zerohedge.com/article/ron-paul-discusses-contagion-gold-goldman-and-fed


http://www.youtube.com/watch?v=evYwPJUY_cc&feature=PlayList&p=72DA55378112F0F9&playnext_from=PL&index=21

[blaavass]

Nice documentary "Meltup" summing up the financial situation in US:

http://www.youtube.com/watch?v=eb1n1X0Oqdw


By the way, the same guys made this documentary "The dollar bubble" in 2009:

http://www.youtube.com/watch?v=eZA0qNsf4m0

[blaavass]

Here is a good commentary by Kevin Hasseton on the government debt crisis and the EU rescue package:

http://www.aei.org/article/102053

[blaavass]

To me, it seems like the coming correction is under way now.

Hang Seng seems to be likely to break down.
http://finance.yahoo.com/echarts?s=%5EHSI#chart1:symbol=^hsi;range=5y;indic ator=sma(150)+volume;charttype=line;crosshair=cros s;ohlcvalues=0;logscale=on;source=undefined

Note that the ascent has come with lower volume, while the rolling over seems to have been on increasing volume.

In post #8 I forecasted S&P500 to reach approximately 1220 based on technical analysis. On 19th April it reached 1217 and it seems to have started to roll over. You can see the same tendency of lower volume of the ascent and higher volume in the roll-over.
http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=5y;ind icator=sma(150)+volume;charttype=line;crosshair=cr oss;ohlcvalues=0;logscale=on;source=undefined

OSEBX seems to be rolling over too and I guess 150MA will be finally broken very soon and the support level of 340 is the next to go. The 340 level can become the neckline of a double-top formation and will provide great opportunities for shorting the market through a BEAR ETF.
http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=500&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

The dollar index has risen dramatically since December 2009, which means that money is tight and is putting pressure on equities.
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=dmax

Crude oil seems to be breaking down too.
http://quotes.ino.com/chart/index.html?s=NYMEX_CL.N10.E&t=&a=&w=&v=dmax

Inter bank interest rates have risen, which also indicates that money is tight.
http://www.norges-bank.no/templates/article____55480.aspx

The money supply has been contracting lately, which is putting downward pressure on equities.
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

All-in-all, things seems to be rolling over and shorting becomes an opportunity for the coming weeks and months. It will be interesting to see if the gold stocks will be taken down by a sell-off or if this now will be the time where all gold stocks starts to make bigger moves upwards along with the gold price.

When the fall gets going I will look for bottom formations and I will keep an eye on the money supply. If the money supply starts to balloon again I will get more cautious about not staying too long in the shorts.

[blaavass]

How did Ben Bernanke get things so wrong?

Well, I’ve read that he has been a student of the great depression and I think he has to be understood through that. In the great depression of the 30ties, money supply contracted, price level decreased, GDP contracted and unemployment rose.

I can understand that the great depression can be understood as a liquidity crisis. Remember that the US economy was quite sound back then with production, exports and I believe they had a trade surplus. The debt levels were high, which is similar to these days, but I believe the government were much smaller and government debt likewise.

Even George Soros advocates that it was the lack of liquidity being the main problem in the 30ties. He states that to avoid a depression, one has to avoid a banking crisis to unfold. He therefore applauds the extension of money supply to prevent the banking crisis, but admits that stagflation might become the result instead. However, he believes that stagflation is a much more desirable outcome than a depression.

I guess the following became Bernanke’s line of thought:
- To avoid a depression I need to avoid a banking crisis
- To avoid a banking crisis I need to provide liquidity and take bad debt temporarily off the hands of the banks. I can achieve both by buying their debt with newly printed money.
- When the economy recovers, the valuation of the debt will come back and the FED can sell the debt back into the market and at the same time contract the money supply again before inflation becomes a problem.
- In the course of the crisis there will be a large contraction in the money supply by private sector. This will prevent the FED extension of money supply to cause inflation. When the economy recovers the money supply will extract again and the FED can contract their contribution to the money supply along with the strengthening economy.

Of course, this medicine does not really include a solution to the main problem, which is too much debt in the system.

However, the main issues for disaster in the coming years, I believe lies in a set of misconceptions by the FED.
- This time more or less all governments in the western world are severely indebted when entering the crisis.
- A financial crisis normally generates huge further increases of the government debt due to Keynesian policies of spending and reduced income for the government.
- This time the whole world participated in the boom and they are feeling the bust together.
- For the government bond market it is not the same thing if Greece and US have a 100% level of debt to GDP. US and other large economies will have a totally different effect on saturating the market and causing interest rates to rise. At the same time creditor countries are likely to slow down their lending to spend more money at home to soften their own crisis. At these large debt levels, rises in interest rates significantly increases the risk for government defaults.

In summary, Ben Bernanke didn’t understand the dynamics between the high level of government debts when entering the financial crisis, the increases of government debt during the crisis, how the bond market will be saturated and its response to bankrupt nations. Finally he will have to realise that he has problems related to insolvency and not just about liquidity. That means that his exit strategy is no longer available without crashing the markets. Also, the valuation of the debt purchased by the FED is not coming back. I guess Bernanke has discovered this already, or he will so very soon.

Faced with the problem of crashing the markets and taking huge losses on purchased debt, it is easy to just extend the easy money policy further as long as inflation is not a visible problem. Of course, when inflation starts to pick up it is already too late and the ketchup is coming rapidly out of the bottle….

This way, it is not expected that the stock markets will decline as much as in the 30ties. After bottoming it should rise quite much due to the inflation. The worst part of the deflation will not come before the money system more or less breaks down and a harder money system is reintroduced.

The historical chart for the Dow-to-gold ratio shows that this crisis is of proportions with the crisis in the 1930ies, but the change in response from the FED makes sure it will not be identical.

Same, same, but different...!

[blaavass]

Hugh Hendry is a fascinating hedge fund manager with very independent thinking. It is not always easy to understand his thinking, but he is undoubtedly a smart guy:-)

Now he is betting big time on crash in China causing crash in the world economy.

"Hendry joins hedge fund manager James Chanos and Harvard University professor Kenneth Rogoff in warning of a potential crash in China. The nation’s 13 trillion yuan ($1.9 trillion) of new lending in the past 16 months, bigger than the economies of South Korea, Taiwan and Hong Kong combined, is spurring industrial capacity expansion in the same way Japanese credit built inventory during and after World War I, Hendry said."

http://www.businessweek.com/news/2010-05-18/hugh-hendry-shorts-china-betting-on-1920s-japan-like-crash.html

[blaavass]

Here is a really good summary about monetary policy and rather controlling the money supply instead of the interest rates based on the CPI. It is written by Anne Siri Koksrud, who is an engineer (not economist) and a member of the political party Venstre (liberal party).

http://www.minerva.as/2009/12/17/stabil-pengemengde-heller-enn-stabil-inflasjon/

[blaavass]

This long-term graph for the S&P500 index is interesting to follow.
http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=my;ind icator=sma(150)+volume;charttype=line;crosshair=cr oss;ohlcvalues=0;logscale=on;source=undefined

I've mentioned earlier in this thread that the index has formed a huge double top with neckline at 800. The last bounce up is starting to look like a perfect shoulder which is turning down again right now...

If this graph breaks down through the 800-level, I believe it will signal the start of the depression in the US...

[blaavass]

New presentation by Niall Ferguson:

http://financetrends.blogspot.com/2010/05/niall-ferguson-on-fiscal-crises-and.html

[blaavass]

A comment to the previous post. This presentation by Niall Ferguson is really narrowing in on conclusions to what will happen due to the government debt crisis.

I will also recomment the Q&A session after his presentation:
http://www.iie.com/events/event_detail.cfm?EventID=152&Media

[blaavass]

Here is a great presentation by Marc Faber at "Austrian Economics and the Financial Markets," the Mises Circle in Manhattan on 22 May 2010 in New York.

http://www.youtube.com/watch?v=H0sS6a9RW2E&playnext_from=TL&videos=rHRtYp_gwzo&feature=sub

[blaavass]

Lappland Goldminers (GOLD) is looking good technically. I mentioned the buying point when breaking up through 8 SEK. Next buying point will be if it turns up again after testing 8 SEK from the upside, which can happen already in the coming day. Then further buying can be done on breaking up through 150 MA and on corrections back to 150 MA.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14


I have several times commented positively about the GOLD stock. I have to admit that I didn't think it would fall this low. As I commented in post 18 as quoted above, I was watching for a break-out through SEK 8 to buy more. By waiting for this breakout I didn't buy at that level of consolidation, which is good considering the following fall.

I've always expected high volatility, so I'm very cautious with leverage and the amount of money allocated. This way it is easy to sit through declines.

However, now I'm buying and here is why:
1. The stock price is now very much below 150 MA and looking back on history of the graph, this has alway resulted in at least a bounce back to about 150 MA.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20070101&to=20100605&period=&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

The recent sell-off can of course be that insiders know that there is something wrong and are selling, but I believe that the stock is mainly hit by the general market sell-off. If there are something fundamentally wrong about the company, it would be unlikely that the company could issue shares at SEK 11 just recently.

2. The current graph might prove to have completed the first wave in a multi-year elliot wave pattern, with wave 1 and 2 from November 2008 to May 2010.
http://en.wikipedia.org/wiki/Elliot_wave

"Wave 1: Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative. The previous trend is considered still strongly in force. Fundamental analysts continue to revise their earnings estimates lower; the economy probably does not look strong. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume might increase a bit as prices rise, but not by enough to alert many technical analysts."

"Wave 2: Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and "the crowd" haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% (see Fibonacci section below) of the wave one gains, and prices should fall in a three wave pattern."

If this is actually the completion of wave 1 and 2, this will be an excellent time for buying. The stock price should however not break below the low of November 2008, which came at a major market sell-off...

Danger signal would be if the stock price breaks below the low of November 2008... However, I'd be very surprised if that happened.

3. I still believe in the fundamental story for gold and gold companies. If stock markets, commodity markets, commercial real estate, property markets in China, government bonds all falls this year including turmoils in the currency markets and bank problems, I believe capital can get really desperate for safety. That might end in a massive run for gold and the steepest part of the climb can get kick-started.

In sum, the odds are now good enough for me to buy:-) We'll see if it can turn into a profit within year end.

[blaavass]

A very interesting interview with Felix Zulauf:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/28_Felix_Zulauf.html

[blaavass]

Resources on understanding the money system and fractional reserve banking:

1. Fiat empire
http://www.dailypaul.com/node/351

2. Mises Institute
http://mises.org:88/Fed

3. The Money Masters
http://video.google.com/videoplay?docid=-515319560256183936#

[blaavass]

www.themoneymasters.com

The Money Masters are quite focused on conspiracy by elite bankers, but it is quite interesting that they have suggested a specific solution for getting back to sound money over a one-year transition period.

http://www.themoneymasters.com/monetary-reform-act/

The Two Step Plan to National Economic Reform and Recovery
1. Directs the Treasury Department to issue U.S. Notes (like Lincoln’s Greenbacks; can also be in electronic deposit format) to pay off the National debt.

2. Increases the reserve ratio private banks are required to maintain from 10% to 100%, thereby terminating their ability to create money, while simultaneously absorbing the funds created to retire the national debt.

[blaavass]

The Duch documentary "The day the dollar falls" from 2005 is trying to describe how a scenario of dollar collapse will unfold.

http://www.youtube.com/watch?v=mhtTfK6Vuz8

http://www.youtube.com/watch?v=pI7L2vSX-hA&feature=related

http://www.youtube.com/watch?v=WNzyWPxxXvQ&feature=related

http://www.youtube.com/watch?v=V8QatTcuOSE&feature=related

http://www.youtube.com/watch?v=nr_Rl9vRfRo&feature=related

http://www.youtube.com/watch?v=rrM7TzpERSo&feature=related

[blaavass]

In the interview mentioned in post #125 above, Felix Zulauf describes the following scenario as most likely:
1. There will be strong deflationary forces and countries will use inflationary actions as antidote.
2. Central banks will keep interest rates low.
3. Finally there will be a banking crisis much bigger than what has been experienced until now.
4. Central banks will then create enormous amounts of money in trying to save the system by injecting liquidity.
5. The unprecedented amount of money created will make the currencies worthless in just a few weeks time. Seems to me that he is quite aligned with the documentary "The day the dollar falls" mentioned above. He doesn't believe in a development of large inflation or hyperinflation over many years like in the 70ies.
6. Then there will be a currency reform eliminating a lot of debt and a lot of wealth.
7. His advice is to keep your assets out of the credit- and banking system.

[blaavass]

Here's a speculation on how things actually can/will unfold:

- I don't think the moneymasters' solution will ever be fully implemented. The printed dollars would have to be sent to foreigners in China, etc, while credit within USA would become extremely scarce and causing a huge amount of bankruptcies. Politicians will never prioritise foreigners over of their own voters.

- An alternative way might be to print money and let the FED buy US debt in the market, but keep the fractional reserve banking system, i.e. this will be a monetisation of the debt. I guess that the FED would try to conceal such buying as long as possible. They would print money for so long as possible to reduce the debt as much as possible before the currency gets into trouble for real, i.e. shifting the bonds from China, etc, to the FED.
Remember that such an elimination of debt will reduce the US' interest payments, since this will mean that much of the interest payments will be paid to the FED instead of to China.

The market will finally collapse the currency and it will stop working, i.e. the market will not acccept dollars as payment because they no longer can value the dollar compared to other currencies. Then a currency reform will be implementet (Amero?) with effectively a huge devaluation of the currency. This will eliminate much of the remaining debt and it will eliminate much wealth related to value of money.

To stabilise the new currency and to mitigate any further currency collapse and hyperinflation, the money printing would be stopped, interest rates would be rised significantly and maybe the new currency would be backed with gold or commodities.

Note that this is a scenario where there can be low price inflation right up to the currency collapse.

Do anyone agree or disagree for such a scenario to be possible?

[blaavass]

What would actually trigger a dollar currency reform?

- Interest rates on US government debt icreases so much that interest payments become unbearable. A devaluation will have to bring interest payment levels down to bearable levels.

- The value of the dollar collapses and the foreign market stops accepting payment in dollar because they are no longer able to value it relative to other currencies or goods. This dollar collapse will be preceeded by an unprecedented money printing to rescue the banking system, or that it becomes obvious for the market that the FED is buying huge amounts of US debt with printed money (quantitative easing).
A plunge in the value of the dollar can also happen if the US defaults on their payments on the debt, but I think they'd rather print up enough for the payments.

I would think that the US will have to implement specific measures to stabilise the new currency. Otherwise it will be Zimbabwe all over again with no end in sight.
Those measures would be rised interest rates (like Iceland), full stop in further money printing and a backing of the new currency with commodities or gold.

[blaavass]

How to preserve your wealth through such a scenario of currency collapses/devaluation?
- The ultimate store of wealth will be physical gold and this will always be liquid in some ways.
- Paper gold or ETFs can be risky. Your gold certificate might get settled in currency or not at all due to bankruptcy. The institution behind the ETF might get wiped out in a banking crisis. At least it might get illiquid for long times.
- Gold stocks should become a fantastic investment, but could experience tremendous volatility and maybe illiquidity for some periods. Some gold companies can go bankrupt due to credit problems, but in general the gold prices should spike up and cost go down in real terms making their margins soar.
- Some property can be ok, but I would expect property markets to take severe hits due to lower demand and credit problems.
- Commodities like oil and metals can be ok, but I would expect these markets to take severe hits due to lower demand.
- Cash of the soundest currencies like NOK can be good. I think it can experience some weakness as long as there are big currencies that the market rather escape into during turmoil. A plunge in the oil price might affect the value of NOK negatively. When there is finally no big currencies left as safe havens, the NOK can become extremely strong.
However, I guess even NOK can be dangerous too. If the international banking system goes down, all the banks in the countries with sound money will have funding problems. The central bank might be forced to print money to keep the banking system afloat. Even if the country has a lot of money like the Norwegian government, it might take severe hits in terms of value on their assets and it might get illiquid. The only option left becomes printing money. On longer term it can also be difficult. When "all" your neighbours have devalued their currency, you are in a situation where you have a superstrong currency and your export industry get wiped out. The country might find itself forced to devalue to align wages/cost with the other countries to be able to save its industry. Even the soundest currencies can be dangerous both on short and longer term.
- Long term bonds will not be any good investment, since it will take hits from both devaluations and higher interest rates.
- Short term bonds can be ok related to not loosing value when interest rates go up. However, it will not be protected against a currency reform.
- Your own debt should be with fixed interest rate. Your principal will be devalued and you will escape the higher interest rates following:-)

When it comes to timing, I think gold and cash of the soundest currencies will be good in the short term. Asset markets will take hits and it might be smart to switch from cash and into real asset or equity markets after they have plunged. When devaluations happen it can cause tremendous upwards realignment of assets and equity. Even gold can take some initial hits. That will be a great opportunity for shifting from cash and increasing your amount of gold.

[blaavass]

Here's an update on the US debt and some predictions about the markets:

http://www.zerohedge.com/article/3-days-month-169-billion-debt-redeemed

[blaavass]

Here's an interesting read from Martin Armstrong. He seems to also forecast troubles in the markets this year. The big question is if new lows will be taken out like happened on Dow Jones in 1931. His opinion is that new lows will not be taken out. That will be one of the great questions to ponder about in the coming time.

http://www.scribd.com/doc/32234380/The-Two-Phases-of-the-Great-Depression-5-27-2010

[blaavass]

Another good presentation by Niall Ferguson in May this year. It is much of the same as previous presentations on government debt. He makes one very interesting comment about the Euro (from 42:13). He don't think the Euro will break up, but it will become a weak currency because the ECB will print money to avoid a defaulting banking system.

I believe this mechanism, printing as the last resort to avoid defaults, is the mechanism that will run its course in deciding the economic future. Central bankers will be too afraid of the consequences of total breakdown of the financial system, which they believe will result in depression. As George Soros they believe stagflation will be a much better outcome. What is more difficult to say, is if the consequence will be strong inflation throughout this decade or if it will be currency collapses ending in currency reforms with large devaluations. My best guess is that the world will experience both. Where capital outflow concentrates, there will be collapses, and for the other countries there will be strong inflation.

http://www.youtube.com/watch?v=5qw42-Adjxg

[blaavass]

Here is an article about IMF having already committed more resources to Europe than they have available.

The article states that much of the resources of IMF are based on credit lines from the member countries. Well, that means that if the member countries are bust, so are the IMF. They might be able to sell gold, but this is how crisis spreads with cascading effects from a specific event or default - through the credit lines!

http://www.na24.no/article2918923.ece

[blaavass]

Inflation explained by Donald Duck & Co:

http://www.youtube.com/watch?v=t_LWQQrpSc4

[blaavass]

The Donald Duck cartoon about inflation belongs to the Disney animated series "Duck Tales", and this film were aired in 1989 (season 3 of Duck Tales).

http://www.youtube.com/watch?v=GO-gPQqdPWY

http://www.youtube.com/watch?v=N_QywJrfv-A

[blaavass]

here's a good interview with Bill Laggner, an hedge fund manager with exceptionally results over several years. 134% gain in 2008 is quite good...

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/6/5_Bill_Laggner.html

[blaavass]

I've linked to several videos by Dr. Berninger. Now he's been interviewed by Max Keiser on television.

http://maxkeiser.com/watch/the-keiser-report/keiser-report-46-27-may-2010-guest-dr-joern-berninger/

[blaavass]

Letting the Yuan appreciate IS the decoupling between China and US.

http://www.hegnar.no/okonomi/article433351.ece

http://www.youtube.com/watch?v=GNMDvf5riyo&playnext_from=TL&videos=LOTrLuEVL8k&feature=sub

[blaavass]

Shorting opportunities might happen during this summer, watch out during your holiday. Technical analysis seems to indicate a major turning point with a head-and-shoulder forming.

http://www.hegnar.no/personlig_okonomi/article433352.ece

The S&P500 also looks like working on a head-and-shoulder formation.

http://quotes.ino.com/chart/index.html?s=CME_INX&t=&a=&w=&v=dmax

[blaavass]

Good comments by Peter Schiff about the consequences of the Yuan appreciation.
- Chinese purchasing power will increase and drive commodity prices higher.
- The Chinese don't have to buy as many treasury bills, which will drive interest rates higher.

http://www.youtube.com/watch?v=EGfE2cLodWo&playnext_from=TL&videos=iue6gXk8n5Y

I would add that the Chinese consumer goods will become more expensive, which will export inflation instead of deflation as earlier. Together with rising commodity prices I would think that price inflation in consumer goods is likely and that will finally make the CPI start to go up.

[blaavass]

It seems like some politicians are waking up and is starting to understand where the borrow-and-spend policies will end.

http://www.zerohedge.com/article/women-come-out-swinging-first-merkel-now-mcmorris-rodgers-joins-contra-geithner-chorus

[blaavass]

Hugh Hendry with some great comments on George Soros, etc.

http://www.zerohedge.com/article/hugh-hendry-i-want-bring-george-soros-down

[blaavass]

Media is now starting to pick up on the potential technical turning point forming:
http://www.hegnar.no/personlig_okonomi/article434619.ece

It is also interesting to observe that both OSEBX and S&P500 has turned down after not being able to break through 150MA:
http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=500&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=
http://finance.yahoo.com/echarts?s=%5EGSPC#chart2:symbol=^gspc;range=5y;ind icator=sma(150)+volume;charttype=line;crosshair=cr oss;ohlcvalues=0;logscale=on;source=undefined

I'm keeping an eye on the Hang Seng to see if that also turns down again after testing the 150MA:
http://finance.yahoo.com/echarts?s=%5EHSI#chart9:symbol=^hsi;range=5y;indic ator=sma(150)+volume;charttype=line;crosshair=cros s;ohlcvalues=0;logscale=on;source=undefined

[blaavass]

Interview with good perspectives on the American debt situation.

http://www.youtube.com/watch?v=wQ0Cwigt950&playnext_from=TL&videos=yR7PkD9NzWY&feature=sub

[blaavass]

This week the head-and-shoulder formation might get completed in OSEBX:
http://www.hegnar.no/personlig_okonomi/article435544.ece

[blaavass]

Hm, today the 340 level was taken out downwards on OSEBX. A pull-back closer to the 340 level will be a perfect time for shorting the index.

http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

[blaavass]

That so many stock indexes in the world are showing the same technical signals now, makes the probability higher and the consequence more severe compared with only one stock index showing a technical signal.

Watch out!

http://www.hegnar.no/personlig_okonomi/article436369.ece

[blaavass]

Interesting interview with Robin Griffiths where he commments that gold stock finally looks like coming alive:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/6/26_Robin_Griffiths.html

GOLD looks like finally have bottomed out just after the indexes have topped. Makes sense.
http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

I'm now expecting the ellliot wave 3 to start in the GOLD stock:
"Wave 3: Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1."

GOLD topped out at 14 NOK in wave one. Ratio of 1,618 to wave one will be 22,65 NOK, which would be about 570% gain from where we are now. Let's see what happens...

[blaavass]

Not easy with speculation in individual stocks:-)

GOLD has broken down to alltimelow on large volume. Not a good signal at all. Seems like someone big is getting out. It will be interesting to see if any bad news surfaces in the near future...

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[blaavass]

A long and interesting interview with Felix Zulauf:
http://www.ritholtz.com/blog/2010/08/the-big-picture-interview-felix-zulauf-2/

[blaavass]

Finally, GOLD is starting to behave proper again with a strong bounce from the bottom.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[blaavass]

Here are some interesting views from Albert Edwards.

http://www.dn.no/forsiden/borsMarked/article1949869.ece

More on him:
http://www.marketoracle.co.uk/Article14936.html

[blaavass]

Lately, housing and bnp in US are weaker than the market has hoped for. It is lining up for an interesting autumn.

Dr. Berninger thinks a crash in US equities is just around the corner:
http://www.berninger.de/crisis-analysis-opinion/datum/2010/08/17/mi-report-week-33.html

Here is a very interesting description on how things can play out with regard hyperinflation in US:
http://www.zerohedge.com/article/guest-post-how-hyperinflation-will-happen
http://www.zerohedge.com/article/guest-post-hyperinflation-part-ii-what-it-will-look

"Essentially, I argued that Treasury bonds are the New and Improved Toxic Assets. I argued that, if there was a run on Treasuries, the Federal Reserve—in its anti-deflationary zeal, and its efforts to prop up bond market prices—would over-react, and set off a run on commodities. This, I argued, would trigger hyperinflation."

It seems like the FED is ready to overreact:
http://www.nytimes.com/2010/08/28/business/economy/28fed.html?_r=1&hp

[blaavass]

Another interesting lecture by Neil Ferguson. He's talking about the collapse of the US due to fiscal crisis and that history teaches us that the endgame for an empire normally happens very fast.

http://fora.tv/2010/07/28/Niall_Ferguson_Empires_on_the_Edge_of_Chaos#chapte r_02

[blaavass]

Here's a fairly long, but very interesting guest-post on ZeroHedge by Doug Casey describing how things can play out in this decade.

http://www.zerohedge.com/article/guest-post-no-way-out

[blaavass]

Actually, the money printing of the FED has been very weak for quite a while now. If there is a strong reaction in this curve up or down, I guess the next correction is either started or just around the corner.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

[blaavass]

Lectures by Niall Ferguson are always interesting. Here is one from Australia on 28.07.2010 revolving around how an empire fall. It seems like Nialll is concerned about the fall of the US empire being right around the corner and that it can unfold quite quickly.

http://fora.tv/2010/07/28/Niall_Ferguson_Empires_on_the_Edge_of_Chaos#chapte r_02

[blaavass]

Interesting article on why gold producing companies is expected to start reporting higher earnings now:

http://www.zerohedge.com/article/eric-sprott-bonfire-currencies

[blaavass]

Here is an interesting post on ZeroHedge with timed predictions of coming hyperinflation in US:

http://www.zerohedge.com/article/gonzalo-liras-redux-signs-upcoming-hyperinflation

"These factors all point to one and the same thing:

An imminent currency collapse.

Therefore, I am confident in predicting the following sequence of events:

• By March of 2011, once higher commodity prices reach the marketplace, monthly CPI will be at an annualized rate of not less than 5%.

• By July of 2011, annualized CPI will be no less than 8% annualized.

• By October of 2011, annualized CPI will have crossed 10%.

• By March of 2012, annualized CPI will cross the hyperinflationary tipping point of 15%.

After that, CPI will rapidly increase, much like it did in 1980.

What the mainstream commentariat will make of all this will be really something: When CPI reaches 5% by the winter of 2011, pundits and economists and the Fed and the Obama administration will all say the same thing: “Happy days are here again! People are spending! The economy is back on track!”

However, by the late spring, early summer of 2011, people will realize what’s going on—and the Federal Reserve will initially be unwilling to drastically raise interest rates so as to quell inflation."

[blaavass]

See below for a fascinating interview with Peter Schiff where he finally gets praise instead of just being perceived as an extremist. I see this as yet another indication of a fundamental pshycological shift in how the world looks at US treasuries, the FED and the world economy in general.

http://www.europac.net/media/tv_interviews/peter_schiff_november_4_2010_fbn_%E2%80%93_fox_bus iness_news

The increases in value of gold, commodities and stock are indicating flight from US treasuries and dollars. Yet another evidence of the pshycological shift.

The QE2 are increasing the tensions between USA, China and other countries, ref G20 meeting and comments on currencies and trade wars. It seems like the Chimerican marriage is rapidly approaching it's divorse (ref Niall Ferguson). Divorses are not generally know to have linear development, but rather dramtic ends.

[blaavass]

Here is a highly relevant and to-the-point interview with Niall Ferguson from May 2010:

http://www.youtube.com/watch?v=loUUVhibkOQ

[blaavass]

Interesting video from visionvictory on the last developments in the American bond bubble.

http://www.youtube.com/watch?v=JNst5CDHlAc&feature=sub

[blaavass]

The GOLD stock are working on the resistance of the 150 days moving average. Volume has picked up lately and it looks like it will finally break upwards through the 150 MA. My best guess is still that the fun will pick up after this breakthrough.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[blaavass]

The county Vallejo in California is a great illustration in miniature of the situation facing USA as a country:

http://www.dn.no/forsiden/utenriks/article2051823.ece

1. Too much spending is the root cause of the situation:
- We had over several years had too high costs relative to incomes. In 1992, told a committee that this city would go bankrupt in 2010. But nothing was done, "said Mayor Osby Davis.

2. The bond market will finally react and escalate the situation. The same will eventually happen with US treasuries also:
Investors in the giant U.S. market for state and municipal bonds, are fearing bankruptcy wave, and follows the fate of Vallejo with Argus eyes.

This market represents a total of 2,800 billion dollars (about 17,000 billion). The last two weeks is more than five billion U.S. dollars pulled out of the market.

- The great risk in this market is that the fear of collapse of a municipality gets people to pull money out, said recently Matt Fabian, Commander of the U.S. research firm Municipal Market Advisors, told the newspaper the Financial Times.

3. The debt problem is moving up in the foodchain until it reaches country level. The only difference is that the country can choose between default or printing the money:
Defaults on a loan of 50 million dollars (300 million) was what tipped Vallejo. It is far larger sums in question to the state of California, also to finance a deficit of 26 billion dollars (around 156 billion).
- California collected money from us to try to balance their budget. They said they would pay back next year. But they don't have the money to do it. The state of California is effectively bankrupt. It just has not accepted the reality that the pension costs and the costs are too high. If it does not get cut off quickly, it is only a matter of time before it falls into the same situation as us, "said Osby Davis to the newspaper.

4. Crime will continue to escalate and society to disintegrate along with forced cost-cutting:
The city complained about the increased crime after the police corps had to cut staff from 150 to 90. School budgets are cut, road maintenance is on hold, and new construction projects are deferred for many years.

[blaavass]

Peter Schiff closes the year with forecasting the next crisis in USA, most likely due in 2011.

http://www.youtube.com/watch?v=lt6DrkqBbe8

Commodities will continue to rise in price and companies will start passing on the higher prices to consumers in 2011. Oil will go over $100 and stay there in 2011.

http://www.youtube.com/watch?v=zMOHK5OMkFM

He also thinks gold stocks will outperform gold itself in 2011.

http://www.youtube.com/watch?v=1NsOlDDpjbk

[blaavass]

It is fascinating that public persons (Obama's economic advisor, Austan Goolsbee) are now threatening with bankruptcy of USA as a country if they don't get to raise the debt ceiling.

http://www.dn.no/forsiden/borsMarked/article2053273.ece

I'm wondering what China and the bond market in general, are thinking when reading this message...

[blaavass]

Great comments from Kenneth Rogoff on the debt situation in Europe:

http://www.dn.no/forsiden/borsMarked/article2053794.ece

[blaavass]

GOLD has broken through the 150MA in quite a perfect way. Touching it from the downside, retracting before breaking through upwards, retracting back and touching it from the upside before moving up again. Could have wished for more volume in the breakthrough, but for me this looks like a big turnaround in the stock. Hopefully the stock will now continue to move up with retractments back to the 150MA before moving higher again. In case of big gains it could also break through for shorter periods in the following retractment without being a sell signal.

http://norma.netfonds.no//analysis.php?paper=GOLD&exchange=ST&from=20090201&to=20090820&period=100&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[blaavass]

Here is a really good video summing up the financial crisis and its causes, including what is set up to happen in the future. I find the title "Overdose" very much to the point.

http://www.youtube.com/watch?v=4ECi6WJpbzE

[blaavass]

Interesting videos of Charles Nenner from November 2010. He believes in deflation, Dow $5.000 and the Japan scenario.

http://www.youtube.com/watch?v=QKrOOqKpg1A&feature=related

http://www.youtube.com/watch?v=boGb55UvSrc&feature=related

http://www.youtube.com/watch?v=aszQXOsMeZ4&feature=related

[blaavass]

Ref my post in February 2010 where I commented on Niall Ferguson making the parallel between USA-China and England-Germany before 1st world war.

http://www.farmann.no/forum/showpost.php?p=7869&postcount=13

Niall's comments seem to become more and more relevant:
http://www.youtube.com/watch?v=vDI8z7uGYdo&feature=sub

[blaavass]

Many great comments by Nigel Farage on the economic model of the European Union.

http://www.zerohedge.com/article/nigel-farage-whether-italy-next

[blaavass]

Niall Ferguson speaking in Norway at the Skagen new years conference today:-)

http://www.dn.no/forsiden/borsMarked/article2059749.ece

- Hva gjør man dersom man har trykket så mye penger som Fed har gjort, og man ønsker å avslutte trykkingen, selv om økonomien ikke vokser kraftig? Selve exiten kan komme til å trigge en ny krise.

- Hva blir det neste som skjer? Det er virkelig det jeg lurer på.

[blaavass]

A very interesting description from Mike Krieger on how he thinks it will play out going forward.

http://www.zerohedge.com/article/mike-krieger-deconstructs-commodity-inflation-you-aint-seen-nothing-yet


As I have said since the Fed started its QE policy the global monetary and financial system will end in a holocaust of commodity price inflation.

..., this time when the collapse comes it will be seen in the destruction of purchasing power of Western fiat currencies. So rather than seeing the U.S. dollar limit up and commodities plunging, this crisis when it really starts kicking in will be characterized by commodity prices limit up and ultimately a crash in treasuries.

Thus, counter intuitively what do I think Banana Ben will do when prices start soaring? He will print more money. He will justify this by saying we need to get more “money in the hands of the people” so they can buy food and energy.

You will know the episode is over when there is a “new (or devalued) dollar” and indeed possible new currencies across the Western world. Not before this happens will it end.

I still sometimes hear this argument that the U.S. dollar is a claim on the assets of the United States of America. Really? Last I checked it says “Federal Reserve Note,” which to me sounds like a liability of the Federal Reserve, which itself is a private banking cartel. Hmmm…dollar holders as far as I can tell have no claim on U.S. assets but rather claims on the assets of the Fed. Have you looked at the junk they own recently?

[blaavass]

Agricultural commodity prices have been running up, now the food prices are also rising in the stores. It will be interesting to see if not the CPI also starts to increase this year.

http://www.youtube.com/watch?v=_eKzzTHZTVU&feature=sub

[blaavass]

Interesting predictions by Felix Zulauf, also at Skagen new years conference:

http://www.dn.no/forsiden/borsMarked/article2059951.ece


and here is his presentation:
https://www.skagenfondene.no/Global/2.0_PDFs/2.13_Events/Norway/New%20Year%20Conference%202011/13%2001%202011_Skagen%20Oslo_Zulauf.pdf

[blaavass]

Good explanations around inflation by Peter Schiff.

http://www.youtube.com/watch?v=AhtQPc951hA&feature=feedu

[blaavass]

Niall Ferguson 8th July 2010. Great comments on misconceptions by economists and how fast the US empire can fall apart. I think the comparison with Soviet Union is a great one. When commodity prices went down in late nineties, the economy took down the Soviet Union empire and military might.

It will be the economy that takes down the US empire and military might too, but this time it will be the bond market as the direct cause instead of commodity prices.

http://www.youtube.com/watch?v=a75vNw7l3vw

[blaavass]

Money supply has been growing very rapidly lately, now in all-time-high territory.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

[blaavass]

Inflation explained by Milton Friedman:

"The reason that we have inflation in the USA, or for that matter anywhere in the world, is because these pieces of paper, and the accompanying book entry or their counterparts in other nations, are growing more rapidly than the quantity of goods and services produced.

The truth is inflation is made in one place and one place only - here in Washington. This is the only place where there are presses like this to turn out these pieces of paper we call money. This is the place where the power resides to determine how rapidly the amount of money shall increase."

"Every country that has had the courage to persist in a policy of slow monetary growth has been able to cure inflation and at the same time achieve a healthy economy."

http://www.youtube.com/watch?v=iizDNGOEdkc&feature=feedrec_grec_index

http://www.youtube.com/watch?v=yZ9a2QCUzJc&NR=1

http://www.youtube.com/watch?v=J2yLzISKKHA&feature=related

[blaavass]

Flight to quality into gold and commodities...

http://www.zerohedge.com/article/merrills-harley-bassman-why-big-one-and-its-implications

[blaavass]

More on inflation. Good comments by Ron Paul related to the hearing with Ben Bernanke in front of the House of Financial Services Comittee.

http://www.youtube.com/watch?v=EL20eX1v9XA&feature=feedu

http://www.youtube.com/watch?v=T5q_I1bpl6s&feature=feedu

http://www.youtube.com/watch?v=34OkbWYcCHI&NR=1

[blaavass]

In this radio show Peter Schiff gives a very good and rather complete explanation of how the FED exports inflation around the world.

http://www.youtube.com/watch?v=FyN9QVB-UhI&feature=feedu

[blaavass]

It is interesting to hear that Niall Ferguson takes the same view as Peter Schiff that the monetary easing is what has caused the food prices to rise with the unintended consequence of riots in emerging economies.

http://www.youtube.com/watch?v=OBfF_G-XCDg

[blaavass]

The story of the Scotsman John Law of Edinburgh inventing the stock market bubble and indirectly causing the French revolution is told from 1:39:40 to 2:06:00 in “Ascent of Money” by Niall Ferguson:
http://www.youtube.com/watch?v=QY8g_IsI_gY&feature=related

John Law was born in Edinburgh in 1671. In 1694 he fled to Amsterdam after having killed a man in a duel over a woman. In Amsterdam he lived off gambling.

Incidentally, Amsterdam was the capitol of financial innovation at the time John Law had to lay low. The world’s first networked company, the Dutch East India Company, was founded in the 1590’ies and was a great success with monopoly on spice trading from Asia to Europe. Also, the world’s first stock market had developed for trading the stocks of the company and the world’s first central bank had been established in Amsterdam.

Law was fascinated by how the Bank of Amsterdam, Dutch East India Company and the stock market functioned together. However, he felt that a couple of things were lacking. Why limit the number of shares when the demand was so plentiful? Why not issue bank notes to the public?

In 1716 Law arrived in Paris and wanted to use France as a laboratory for implementing his ideas. France was in a desperate fiscal situation with enormous amount of public debt after previous wars and it was on the brink of its third bankruptcy in less than a century

Law developed his ideas somewhere between the stock market and the casino. The first part of his plan was to revive the French economy by establishing a bank on the Dutch model with the difference that this bank would issue paper money. When the public invested in the bank, the government debt was transformed into shares in the bank and Law expected the issuance of paper money to revive trade and confidence in the French economy. He wanted to reflate the country out of the depression.

The monarch gained the ability to print as much money that he liked. As Law wrote: “...an absolute prince that knows how to govern, can extend his credit further and find the needed funds at a lower interest rate than a prince who is limited in his authority. In credit, supreme power must reside in only one person.”

The second part of his plan was to establish an enormous trading company transferring the French people into a body of traders. He founded the Mississippi Company with a monopoly on the trade out of the Louisiana colony located on both sides of the Mississippi river and being ¼ size of USA.

Law didn’t know when to stop printing money and at the same time he gained through increased price of the shares of the Mississippi Company. All he had to do to drive up the price of his company’s shares was to walk down the hall from his office to where the money was printed. He became the ultimate insider trader. By 1720 Law was the richest person and in effect prime minister of France.

However, Law had created a giant ponzi scheme. The company financed dividend payments and made acquisitions of other companies by selling new shares before the company had made any profit. The scheme was depending on an ever larger amount of suckers to buy the shares of the company. Of course, ponzi schemes never works in the long run. When settlers arrived in Louisiana, they found themselves in an insect infected swamp and 80% of them died within a year. Suddenly, the monopoly of trading with Louisiana turned out to be worthless.

Rumours emerged that not everything was working fine in Louisiana and the stock started to fall in price. Within weeks the stock had lost 90%. Law fled to Venice where he died in 1729.

After the bubble burst, France was back into the same fiscal problems and was put off paper money and stock market for a generation. The monarchy lived from hand to mouth and eventually France was driven by royal bankruptcy into revolution.


The parallels with the situation today is strikingly:
1. USA has been running wars for a long time and is in a desperate fiscal situation.
2. The FED has tried to reflate a bubble that has burst.
3. USA is running a ponzi scheme with the bond market.
4. Ben Bernanke doesn’t know when to stop the money printing and by inflating the stock market with cheap money he makes it look like the economy is improving. Also, interest rates are kept low.

Let's see if Bernanke is more lucky than John Law...

[blaavass]

National Inflation Association are now warning that "U.S. Dollar Collapse Could Occur at Any Time".

http://inflation.us/dollarcollapseanytime.html

[blaavass]

The catastrophy in Japan might cost a trillion dollars.
http://www.zerohedge.com/article/baseline-japan-disaster-cost-estimates-3-5-gdp-could-be-high-1-trillion

- I wonder how much US treasuries Japanese insurance companies and others will have to sell because they need the money to rebuild the destroyed areas? I believe Japan holds about $900 bn in US treasuries today.
- I wonder if this can impact the derivative markets?

Don't know, just wondering...


- At the same time China has been decreasing the holding of US treasuries.
- At the same time Spain is likely to need bail-out and turmoil in the Euro is on the rise again.
- At the same time the oil price has been spiking. It is quite classical with recessions following spikes in the oil price.
- At the same time there are uprisings in countries in the middle east with potential further consequences to the oil supply. Conflicts in the middle east might go on for quite a while.
- At the same time commodity prices in general and especially food prices are rising and putting pressure on consumption.
- At the same time unemployment stays high in US, etc.
- At the same time China and emerging markets might be slowing due to overinvestments.
- At the same time QE2 is nearing its end. Of course, I guess the market already expects a QE3...
- At the same time inflation might start to show up in the CPI and central banks will be forced to start raising interest rates.


Just wondering, how can all this possibly go wrong?

[blaavass]

Technical weakness in market indexes around the world:

http://www.zerohedge.com/article/we%E2%80%99ve-taken-out-all-trendlines

[blaavass]

Peter Schiff discussing the economics of the situation in Japan, including the effects on US treasuries.

http://www.youtube.com/watch?v=4vz345JnZUo&feature=feedu

[blaavass]

NIA has a very clear opinion on the tsunami effect on US treasuries and inflation in the US.

http://inflation.us/tsunamijapan.html

[blaavass]

It is strange to observe that S&P is taking a nose dive and the dollar index is not rallying at the same time. Normally, the dollar index would strenghten, but now it is quite stable.

S&P500:
http://quotes.ino.com/chart/?s=CME_INX

Dollar index:
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d12

The CRB index has also been weakening:
http://quotes.ino.com/chart/index.html?s=NYBOT_CR&t=&a=&w=&v=d12

But where are the money flowing then? Well, some money is going into US treasuries, but it is strange that the dollar index is not rallying strongly:
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

Money supply has been growing like crazy lately:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

Gold has also been going down:
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=d12

On currencies the JPY has been showing strenght vs USD and EUR lately:
http://quotes.ino.com/chart/index.html?s=FOREX_USDJPY&t=&a=&w=&v=d12
http://quotes.ino.com/chart/index.html?s=FOREX_EURJPY&t=&a=&w=&v=d12

Well, what does all this mean? Where are the money flowing??

I would say that money has been going into cash lately and all currencies have been gaining in value. The JPY have been gaining more in value, but this is most likely due to the heavy liquidation of stocks, etc in Japan due to the catastropy.
Some money are flowing into US treasuries, but I would say that money are not flowing to US dollar as a safe heaven anymore. There might be some intervention in the currency markets and the money printing is pushing the dollar down somewhat?

In any case, it seems like there has been an important psycological shift in the perception of the dollar being the safe heaven anymore.

[blaavass]

Here is an alert issued by Chris Martenson.

http://www.chrismartenson.com/blog/alert-nuclear-economic-meltdown-in-progress

For decades, the world has been running its own nuclear-style reaction, only in the currency and debt markets, where exponentially-accelerating piles of debt and money have spun about faster and faster in a gigantic, complex, coordinated reaction, the core of which is, and always has been, the United States.

At the very center of this ungainly money reactor is the main fuel pile itself, the US Treasury market. With any interruption to smooth flow of money through this pile, it will immediately become unstable.

The threat I see goes like this:
Stage 1: The world watches, riveted, as Japan suffers a tragic and horrible earthquake and tsunami, but as horrifying as these are, they are localized phenomenon affecting a relatively small percentage of the country. The real trouble lurks within damaged nuclear plants, which are now ruined and will never again produce electricity for Japan, creating instant shortages that will take years to remedy. Worse, a dangerous plume of radioactivity is carried south by winds. Tokyo partially empties and shuts down for all practical purposes.

Stage 2: The abrupt slow down of the world's third largest economy alters the smooth flow of cash around the globe, and even causes reversals of some other long-standing flows. Chaotic eddies emerge in a decades-old pattern of ever-increasing flows of money into and out of the money centers, and various carry-trade and other interest-rate-sensitive strategies blow up. Manufacturing in Japan screeches to a halt, disrupting just-in-time manufacturing strategies both internally and across the globe.

Stage 3: In order to fund the rebuilding effort, Japan has to buy a lot of items from foreign suppliers at the same time that its exports plunge precipitously. At first Japan simply does not participate in US Treasury auctions, leading to a shortage of buyers. But eventually Japan has to sell some of its vast hoard of US bonds in order to pay for external items needed for its reconstruction. Further, insurance companies, huge holders of US bonds, face stiff liability claims in the wake of the worst natural disaster to hit a heavily industrialized center and are forced to redeem enormous amounts of Treasury paper. US Treasury yields begin to climb.

Stage 4: Continuing unrest in the MENA region serves to keep oil elevated and local funding needs high, while Europe's weaker players (the PIIGS) continue to slip under the waves. Money continues to ebb away from the US Treasury market. Forced by circumstance, the Federal Reserve reverses its linguistic course and opens the monetary floodgates once again. There's nothing like a crisis to justify more money printing, especially to a one-trick pony (the Fed) that only knows how to stamp its hoof on the 'print' button.

Stage 5: An increasingly chaotic monetary and fiscal situation spills over into the derivatives arena, creating a number of financial accidents. Stressed governments find themselves in more of an arguing mood than a pull-together-and-sing-Kumbaya mood, and agreements are hard to come by. Banks begin to fail again, global trade falls off, unrest continues to build, and then it happens - a currency crisis.

Stage 6: Everything changes. Faster than you think.


Timing
My best guess is that the situation in Japan will unfold over the next two weeks, with a full blown funding and fiscal crisis (of confidence) blossoming there over that time. Already we are seeing credit spreads on Japan's sovereign debt begin to skyrocket, meaning that an increasing chance of a sovereign default is being priced into the debt markets. This is the same dynamic we saw with Greece, then Ireland, Iceland, too, and so on. Only this time it is happening to the world's third largest economy.

Two weeks after that, I expect that the first real product shortages and associated work stoppages will begin to hit the US and European economies. I expect the difficulties to surface first in Europe followed by the US. Somewhere in this zone we will get the next solid commitment to print, print, print, probably as a joint exercise of both continents.

Taken together, I think we've got at least a month until things have shifted enough that preparations will become either difficult or irresponsible.

Use this next month very wisely.

[blaavass]

I can't help thinking of the catastrophe in Japan as a Black Swan to the financial markets.

http://en.wikipedia.org/wiki/Black_swan_theory

The theory was developed by Nassim Nicholas Taleb to explain:
1.The disproportionate role of high-impact, hard to predict, and rare events that are beyond the realm of normal expectations in history, science, finance and technology

2.The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities)

3.The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs

[blaavass]

Gonzalo Lira is predicting that the turning point for the dollar is likely to be just days away in breaking down.

http://gonzalolira.blogspot.com/2011/03/i-think-today-is-day-dollar-breaks-down.html

This is really the crux of the matter: The Federal Reserve is in a position where they realize that if they raise rates, they bankrupt the Federal government. So they have to stand pat, and pretend to the public and to themselves that there is no inflation, it’s all just a mirage.

I think this is it: I think this is the point in time when the dollar is going to break decisively lower—the next 48 hours. And if the Consumer Price Index numbers that come out tomorrow (Friday) are as bad as the PPI numbers would lead one to believe, then I think the dollar will fall harder over the next week.

The reason the dollar will break down now is because the Federal Reserve is out of options: No matter how you look at it, the dollar is on the path to oblivion—the egregious Federal deficit and the unpayable debt guarantee this outcome.

My sense is that today and tomorrow are a turning point in the dollar’s road to hell. My sense is that either today or tomorrow, the dollar will break through the 75.63 floor—and then all bets are off. That’s what I think.

[blaavass]

Interview with Niall Ferguson about his new book and his concept of killer apps:

http://www.youtube.com/watch?v=8197GgZ5Gqw

[blaavass]

It is very interesting that the CEO of Walmart is signaling serious price increased in the coming months.

http://www.youtube.com/watch?v=wnGqBhmvvMQ&feature=feedu

[blaavass]

Here is more from Chris Martenson who is interpreting the signals from the FED to mean an end to money printing after QE2.

http://www.zerohedge.com/article/guest-post-global-tsunami-courtesy-fed

It's an interesting read, but I think that if the FED has already planned QE3, they would still want to send signals about the opposite to confuse the market. Considering that the debt ceiling is about to passed in May, lack of buyers to the treasuries and the wish to keep the recovery going, I think it is very unlikely that money printing will end with QE2.

However, the author might be right about the volatility coming and it is for sure extremely difficult to predict what will actually happen.

[blaavass]

If you haven't already, you should absolutely watch the movie "Inside Job".

Here you can watch it for free:
http://www.zerohedge.com/article/watch-inside-job-wall-street-horror-movie-free-0

Here you can download it for free:
http://www.archive.org/details/InsideJob2010


Isn't it fascinating how this movie reminds about the Enron movie. The difference is that this time the extent and consequences are much worse and no-one have been sentenced...

[blaavass]

Gonzalo Lira is predicting that the turning point for the dollar is likely to be just days away in breaking down.

http://gonzalolira.blogspot.com/2011/03/i-think-today-is-day-dollar-breaks-down.html

"My sense is that today and tomorrow are a turning point in the dollar’s road to hell. My sense is that either today or tomorrow, the dollar will break through the 75.63 floor—and then all bets are off. That’s what I think."


Well, now the dollar index has broken down well below 75.63:

http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d12

[blaavass]

It is fascinating how much fraud there are in the US home loan business. 60 minutes is exposing outright forgery of "transfer of ownership" documents by banks (or their subcontractors...). Of course, all high-end professional criminals outsource their dirty work.

http://www.youtube.com/watch?v=QwrO6jhtC5E

[blaavass]

Niall Ferguson's documentary "Civilization; Is the West History?", where each of the episodes are covering one of the killer apps that ensured the dominance of the West.

Now the East is copying the killer apps, while the West is going the wrong way. Is therefore the dominance of the West becoming part of history?

Part 1 - Competition
http://www.youtube.com/watch?v=arhBShGlZjI

Part 2 - Science
http://www.youtube.com/watch?v=eD0HYqNeHiM

Part 3 - Democracy
http://www.youtube.com/watch?v=hjmoeIvk42A

Part 4 - Medicine
http://www.youtube.com/watch?v=S_x4GPmL9MI

Part 5 - Consumerism
http://www.youtube.com/watch?v=wBOFDzQhpa0

Part 6 - Work ethic
(Can't find it on YouTube, might not have aired yet?)

[blaavass]

Part 6 - Work ethic

http://www.youtube.com/watch?v=kQN-djeHskg&feature=related

[blaavass]

For the last months the money supply has been growing like it did during the bank crisis and stock market crash of 2008.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

What is the FED fighting now? Could it be that a run on the treasuries or a run on the dollar has already started - or maybe both at the same time?

[blaavass]

http://www.zerohedge.com/article/why-bernanke%E2%80%99s-next-move-doesn%E2%80%99t-matter

Regardless of Bernanke’s personal qualities, the fact is that it doesn’t matter what he does next. Whether or not he issues QE 3, raises interest rates, references inflation differently, or what have you is irrelevant. We will see some kind of Crisis in the near future because of his policies.

If he raises interest rates, the debt market and derivative implodes. If he launches QE 3, the Dollar collapses and trade wars erupt. If he doesn’t launch QE 3, the stock market collapses.

The idea of “success” is completely off the table at this point. It’s now simply a matter of which Crisis we will see.


Well, well, gold is soaring, dollar is falling relative to other currencies, money supply is skyrocketing, and interest rates on 10 years treasury notes are quite flat.

It seems like the US debt is presently being bought with printed money with the consequence of a weaker dollar. Of course, the amount of gold is not increasing at the same pace as for the dollar and this is causing the gold price to increase in dollar terms.

All of this can turn quickly or accelerate rapidly when the next crisis hits. I suggest you keep an eye on these:

Gold:
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=d12

Dollar index:
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d12

Money supply:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

10 years treasury notes:
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

S&P500:
http://finance.yahoo.com/echarts?s=%5EGSPC#chart2:symbol=^gspc;range=5y;ind icator=sma(150)+volume;charttype=line;crosshair=cr oss;ohlcvalues=0;logscale=on;source=undefined

[blaavass]

http://www.zerohedge.com/article/it%E2%80%99s-2008-all-over-again%E2%80%A6-only-worse

My point with all of this is the following: we have entered a period quite similar to 2008 all over again. Energy and food prices are soaring. And the US Dollar is collapsing.

The only difference is that this time around, the US economy is FAR more fragile than it was in 2008. The average American has far less to fall back on than in 2008. And there are far fewer people with jobs than then.

On top of this, the US debt load and balance sheet is far FAR worse than it was in 2008. We’re running deficits and debt-to-GDP levels comparable to Greece.

In other words, when this mess comes unhinged it’s going to be much, much worse than in 2008. And believe me, it WILL come unhinged.

And this time, when it does, the Fed will have NOTHING to stop it. The Fed’s already grown its balance sheet to roughly $3 trillion AND used every weapon it has to combat Round One of the Financial Crisis. So when the next round hits this time around, the Fed will be powerless to do anything about it.

[blaavass]

It is fascinating how quiet the media is about Fukushima. Here's an interview from today that paints a very bleak picture about the situation.

http://www.youtube.com/watch?v=Vz4I5rb3_BM&feature=feedu

[blaavass]

In bull markets, scams will arise and here is an interesting example called "Pump and Dump" done by NIA, National Inflation Association (http://www.inflation.us/). They have a lot of good information and I've been linking to this myself. However, they are also doing stock recommendations and that's when things get fishy. I've never tried to buy any of their stock recommendations myself, I have only been interested in the information. Their information is ok as far as I can see, especially since they seem to be just repeating Peter Schiff, Gerald Celente, Jim Rogers, etc, in a new wrapping.

The central guy behind this seems to be Jonathan Lebed (http://en.wikipedia.org/wiki/Jonathan_Lebed) that was actually doing the same "pump and dump" during the dot.com boom at the age of 15.

Peter Schiff called them out yesterday and was the first time I became aware of this:
http://www.youtube.com/watch?v=e8M7Q9T4NfI&feature=feedu


By doing some YouTube searching, it appears that this scam has actually been known for a while.

Here's an easy explanation of the NIA business model, from April 2010:
http://www.youtube.com/watch?v=um6FvfYBVSY

Here's a more thorough investigation of the NIA, from June 2009.
http://www.youtube.com/watch?v=gR2nx9I8f5k

I think this is a good example of scams to be aware of. In bull markets all sorts of scams will be tried, both by unprofessionals and professionals. This scam will have to be done with penny stocks since a limited amount of people will be able to move such a stock very significantly.

The bigger scams are made by governments and professionals though:-)

[blaavass]

By the way, Jonathan Lebed got exposed by Cody Williams in this interview years ago. It's a great interview and very much to the point.

http://www.youtube.com/watch?v=MFcgwZ3xjJg&feature=related

[blaavass]

Ah, this is developing into a great YouTube dog fight. Peter Schiff is killing NIA:-)

http://www.youtube.com/watch?v=nZItpZ0TWXk&feature=feedu

[blaavass]

Hilarious

http://www.youtube.com/watch?v=XYOclEsKHtc&feature=feedu

[blaavass]

Interesting interview with Felix Zulauf from 19th May.

http://video.ft.com/v/950633944001/Long-View-Storm-clouds-over-markets

[blaavass]

The Norwegian stock market is falling quite hard these days.
http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

It will be interesting to see how deep the fall will be and if the 2008 scenario is somewhat repeating itself this year.

The oil price has been falling quite rapidly, which can indicate that there are more things on its way than just a regular 10% bull market retractment.
http://quotes.ino.com/chart/index.html?s=NYMEX_CL.Q11.E&t=&a=&w=&v=d12

The dollar seems to be getting ready for a more significant move upwards, i.e. the world is moving into cash.
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d12

The gold price might also retract somewhat, but doesn't look very weak. The coming period might give buying opportunities.
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=d12

The CRB index is showing a significant turn downwards, indicating that it might be commodities that are taking the biggest hit now.
http://quotes.ino.com/chart/index.html?s=NYBOT_CR&t=&a=&w=&v=d12

The FED says it will be stopping the QE2 in end of June, but they'll still reinvest their profit from the bailouts... It will be interesting to see if the money supply starts retracting in July.
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=10yrs

One possibility is that markets might crash this autumn with Europe banking system being on the spot, but triggering a start-up of QE again.

[blaavass]

Bernanke is studdering. My guess is that he'll be looking more and more awkward going forward.
http://www.youtube.com/watch?v=lfqscGPIgJM&feature=feedu

[blaavass]

Good interview with Niall Ferguson on the world economy, the turmoil in the arab countries and the situation for Israel.
http://www.youtube.com/watch?v=dUeaY9A0Ngo

[blaavass]

Riots in Greece.

http://www.youtube.com/watch?v=nFshfFSuXII&feature=feedu

[blaavass]

The NIKKEI 225 index (http://en.wikipedia.org/wiki/Nikkei_225) topped at 38,915.87 in December 1989 and is now at just above 10.000, which is about 75% below the 1989 high!

Markets that have been depressed for a very long time can become very lucrative if an apropriate catalys emerge. In a way the second world war ended the great depression in America.

Investing in a very long term depressed market that has been bottoming for quite some time, also makes the downside risk quite limited;-)

Could it be that the reconstruction after the tsunami is THE catalyst that can make the Japanese stock market quite profitable for several coming years?

http://finance.yahoo.com/charts?s=%5EN225#chart2:symbol=^n225;range=my;indi cator=volume;charttype=line;crosshair=cross;ohlcva lues=0;logscale=on;source=undefined

[blaavass]

The Norwegian bank for student loans has a very interesting graph for comparing floating and longer term interest rates (3, 5 and 10 years fixed rates). The longer term interest rates are made by using the bond market.

http://www.lanekassen.no/Hovedmeny/Tilbakebetaling/Renter-og-gebyrer/Rentesatser/

If you move the graph back to 2007 you will se that the yield curve became inverted at about January 2008, i.e. the floating interest rate became larger than the longer term rates. An inverted yield curve is an old indication of a recession and gave a quite perfect signal in this case.

At present, the yield curve is normal and does not give any signal about a new recession this year...

[blaavass]

The OSEBX has broken down below the 150 days moving average and then has had an unsuccessful attempt of breaking up through the 150 days moving average. To me, this looks like a very weak index and possibly an indication of a shift in trend, i.e. from bullish to bearish market for some time.

http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

[blaavass]

Bernanke is studdering. My guess is that he'll be looking more and more awkward going forward.

The last jobs report has more or less put the recovery story on complete halt. I wonder how Bernanke will comment on this without further stuttering...

www.ft.com has an article with the heading "Jobs report shatter recovery hopes, US adds just 18,000 jobs in June (http://www.ft.com/intl/cms/s/0/9e4ec0f4-a959-11e0-bcc2-00144feabdc0.html#axzz1ReCalSGw)".

Stunned economists reacted with dismay at the overwhelmingly poor figures on the health of the US labour market, released on Friday, which dashed hopes that the recent soft patch in the recovery of the economy could be quickly reversed.

“The June jobs report was a shocker,” said Nigel Gault, chief US economist at IHS Global Insight. “We must hope that it is overstating the extent of the slowdown in the economy – at face value it shows stagnation.”

Many economists – including at the Federal Reserve and in the Obamaadministration – have attributed the soft patch in the US recovery to a combination of supply chain disruptions caused by the Japanese earthquake, higher commodity prices and financial sector uncertainty resulting from the European debt crisis.

The assumption has been that some of these factors are transitory, which means the economy should accelerate in the second half of the year. Improving data at the end of last month – and lower petrol prices – were starting to cement the notion of a looming rebound. But the June jobs numbers may well cast doubt on that view.

[blaavass]

Her er en kronikk jeg skrev i slutten av mars 2009 på bloggen www.kronikker.org, men bloggen er senere blitt nedlagt.

Tittel: Festen er slutt og gjeld må nedbetales
Se for deg en person som har brukt opp sine sparepenger på fest og moro. Vedkommende burde redusere festingen og spare mer, men klarer å holde festen gående ved hjelp av forbrukslån. Når forbrukslånet er oppbrukt, så klarer vedkommende å låne mer gjennom å trekke på sine kredittkort. Deler av den økte kreditten brukes til å betale avdrag på gammel gjeld. Vedkommende klarer å holde festen gående ennå litt til gjennom å låne penger av venner.

Når det ikke er noen som lenger er villig til å låne ut mer penger, så er gjelden faktisk så stor at vedkommende ikke er i stand til å betjene månedlige avdrag basert på månedlig lønn. Alle skjønner at denne personen vil få det tøft, forbruket må reduseres og penger må gå til nedbetaling av gjeld. Det vil ta lang tid å komme seg ovenpå igjen.

Hvorfor er det noe annerledes for nasjoner? Hvorfor er det så mange som fortsatt lever i håpet om at denne resesjonen snart er over?

• Verdens største økonomi må redusere sitt forbruk og nedbetale gjeld
Festen i verdens største økonomi, USA, er definitivt over og deres långivere vil måtte ta store tap. Når USA og andre land må redusere sitt forbruk og i stedet nedbetale gjeld, vil verden merke at det er store overkapasiteter som må reduseres.

Jeg mener USA i praksis er på vei mot konkurs og at markedet nå tvinger amerikanerne til å redusere forbruket og øke sparingen. Først vil verden slutte å låne USA mer penger, men den amerikanske sentralbanken kommer nok til å kjøpe statsobligasjonene i stedet (dvs å trykke nye penger eller ”quantitative easing”) for å finansiere statens budsjetter og for å holde rentene og renteutgiftene på statsobligasjonene nede. Dette vil etter hvert føre til valutakrise med tilhørende sterkt fall i verdien på dollar og til slutt starte sterk inflasjon med tilhørende høye renter. Resultatet er at verdens største økonomi sannsynligvis skal igjennom en langvarig depresjon med de konsekvenser det vil ha for resten av verden.

I de kommende årene vil svært mange amerikanere bli ruinert gjennom massiv arbeidsledighet, store tap på boligverdier og verdipapirer, samt store tap på pensjonssparing. Pga svak dollar vil de oppleve sterk prisøkning på forbruksvarer, noe som ytterligere vil redusere forbruket deres.

USA vil måtte begynne tvungen sparing gjennom å underforbruke og å spare penger. De må gå den lange veien med å bygge opp igjen industrier som kan produsere reelle produkter for eksport som bytte for import. Det vil ta tiår for landet å gå igjennom denne prosessen.

• Pengetrykking gjør pengene mindre verdt
Det som skiller nasjoner fra enkeltpersoner, er at nasjoner kan trykke nye penger og nedbetale gjeld med disse. Det betyr i så fall at långivere må ta store tap i og med at man får betaling i penger som blir mindre og mindre verdt.

Kina og resten av verden som har lånt penger til USA, vil oppleve store tap når de mottar betaling i dollar med sterkt redusert verdi. De som har dollar på bankkonto, vil oppleve at man ikke får kjøpt så mye for disse pengene lenger. USA vil merke at dollar strømmer inn i landet i bytte mot eierskap og reelle verdier som strømmer ut av landet.

Når USA, som har verdens reservevaluta, trykker nye penger til å nedbetale gjeld, følger mange land etter fordi en sterk valuta vil gi problemer med eksporten. Det betyr at det blir en valutakrig der nasjoner konkurrerer om å svekke sin valuta gjennom økt pengemengde og unaturlig sterk reduksjon av renter. Når vi kommer ut på andre siden av denne gjeldsreduksjonen, vil vi sannsynligvis merke effektene av pengetrykkingen for fullt, dvs. sterk inflasjon.

• Forvaltningen av Oljefondet
Så vidt jeg har oppfattet, er dagens forvaltning av oljefondet basert på å se i bakspeilet og på hva som har fungert bra i ca de siste hundre år. Jeg vil hevde at det kan være en dårlig ledesnor i disse tider. Historiekunnskap er viktig for å forstå fremtiden, men dersom man bare kunne kopiere fortiden, så ville det vært mange flere rike personer i verden. Jeg vil hevde at det vi nå opplever ikke er en vanlig resesjon der aksjemarkedet korrigerer 50% for deretter å nå ny all-time-high innen ett år eller to år etter korreksjonen.

Akkurat nå er aksjemarkeder sannsynligvis oversolgt og man vil kunne få et bear market rally før det fortsetter lavere. Mange vil nok se på rallyet som en bekreftelse på at stimulansene hjelper og at vi sannsynligvis har passert bunnen. Man vil for all del ikke miste oppgangen...

Øystein Stray Spetalen har uttalt at ”Den som ikke åpner øya i aksjemarkedet må åpne lommeboka”. Fra mitt ståsted ser det ut som at Oljefondet i lag med de fleste analytikere og økonomer ennå ikke har åpnet øynene for hvor alvorlig og langvarig denne krisen sannsynligvis blir for verden. Det kan altså bli en historisk thriller fremover å observere hvor mye penger som skal renne ut av vår felles lommebok i de kommende årene, både i nominelle- og reelle verdier.

Kanskje det er på overtid at forvaltningen av Oljefondet skifter fokus fra ”hvordan oppnå størst mulig avkastning” til ”hvordan tape minst mulig penger”?

The chronicle above, I wrote in March 2009. I mentioned that we would most likely have a bear market rally and high hopes of a quick recovery. I must admit, that the extreme measures taken by central banks has made this bear market rally much longer than I thought was possible.

However, I believe the bear market rally is now exhausted and that the story of the chronicle is still intact, relevant and worth repeating:-)

[blaavass]

Here is a great interview with Terry Coxon on monetary issues and inflation/deflation comparing things with the 1970'ies.

http://www.zerohedge.com/article/guest-post-road-perdition-interview-terry-coxon

"But the growth in the monetary base has been far more rapid than what happened in the 1970s. There is some time delay between growth in the monetary base and growth in M1, but to make the picture really cloudy, I'm afraid the comparison turns out not to be very useful. Unlike in the 1970s, the Federal Reserve is now paying interest to banks on their reserves.

In other words, the effect is that much of the increase in the monetary base gets locked up and sequestered because banks want to earn the interest on the reserves rather than lending the reserves out or buying investments and increasing the money supply."

"If the Federal Reserve didn’t pay interest on those reserves, the result would be inflation rates far beyond anything the U.S. has ever experienced. The monetary base has more than doubled, and without the Federal Reserve paying interest on the recently created boatload of reserves that is essentially keeping them immobilized in accounts at the Federal Reserve Bank in New York, the M1 money supply would more than double and we would have inflation rates that would make the worst days of inflation in Brazil and Argentina look tame."

"The carry trade is in just about every market at this point. People are borrowing dollars at ultra-low interest rates in the hope of earning a higher return in something else and also hoping to exit at the right time. Virtually all markets have been propped up by the carry trade, and all the carry traders are telling themselves they are going to jump ship at just the right time. When the time comes, the rails of the ship are going to be crowded, and markets likely will move down very rapidly."

"The answer you are going to come to for gold depends on what is causing interest rates to move up. If interest rates are moving up because the expectation of inflation is moving up, then that won't hurt gold, it will help gold. On the other hand, if interest rates are moving up because the Federal Reserve is tightening, then that is bad for almost everything that people have been borrowing to buy, which includes gold and silver and stocks generally."

"More recently, inflation has returned as a worry, and that can turn into worry number one on any given day, at which point the Federal Reserve will slow down the printing or just sit on its hands for a while. That's when interest rates will start moving up, and that's when the carry trade will get unwound, triggering a big downdraft in virtually all markets. But the prominence of inflation as a worry will eventually be replaced by renewed concern about the economy contracting, and then the Federal Reserve will shift its weight again from one foot to the other."

"If a bank has excess reserves and the Federal Reserve stops paying interest on them, if the bank can't think of anything else, it will buy Treasury bills, even if the yields on those Treasury bills are only 0.5% a year. Then the seller of the Treasury bills has the cash.

Whoever the seller of the Treasury bills is, we can safely assume he sold his T-bills because the cash was more attractive to him. And if the cash is more attractive when it's earning zero, that means the person who sold the Treasury bills wants to use the cash to buy something else, and that's how the excess reserves would move from the banks to the general economy."

"I think the most important thing someone can do is to understand what's going on. That's what will give the individual staying power when the markets are temporarily moving against them."

"Job number two, if you see the world as I see it, is to make sure that a substantial share of your wealth is in precious metals and perhaps in foreign currencies, but without any leverage."

[blaavass]

Niall Ferguson believes that it is becoming more and more likely with disorderly defaults on European government debt. This could produce a 2008-sized event in not too long.

Ferguson says European politicians seem to not properly understand the problems and that no strong actions are on the agenda for fixing the problem.

http://www.youtube.com/watch?v=ek3tNikEDtI

[blaavass]

These days all other issues becomes small...

http://www.farmann.no/forum/picture.php?albumid=1&pictureid=1


http://www.youtube.com/watch?v=0_9BTHcpssM


Mitt lille land,
Et lite sted, en håndfull fred
slengt ut blant vidder og fjord

Mitt lille land,
der høye fjell står plantet
mellom hus og mennesker og ord.

Der stillhet, og drømmer gror.
Som et ekko, i karrig jord.

Mitt lille land,
der havet stryker mildt og mykt,
som kjærtegn fra kyst til kyst.

Mitt lille land,
der stjerner glir forbi og blir et landskap når det blir lyst,
mens natten står blek og tyst.


Music: Ole Paus; "Mitt lille land"

[blaavass]

"The US debt crisis is a contrived political showdown. If you want a real crisis, look to Europe", says Grant

http://financetrends.blogspot.com/2011/07/us-debt-crisis-is-contrived-says-jim.html

[blaavass]

Good comments by Peter Schiff on the debt ceiling and coming currency crisis in US.

http://www.youtube.com/watch?v=YvwqX6o69Iw&feature=feedu

[blaavass]

Good comments by Niall Ferguson, from March 2011, on the European debt crisis, earthquake in Japan and the revolutions in the Middle East.

http://www.youtube.com/watch?v=noZGJh6TSfs&feature=fvsr

[blaavass]

Another interesting interview with Niall Ferguson.

http://www.youtube.com/watch?v=o3VmasOh7z8

[blaavass]

Here is a great interview with Dennis Stattman to understand how a portfolio manager is thinking and acting. He is portfolio manager at the BlackRock Global Allocation Fund.

http://www.youtube.com/watch?v=p7zMd4VPmtE

The interesting theme is that Strattman is struggling with finding investment opportunities with low prices and good growth. However, there is one area that looks attractive compared to historic valuations and relative to other asset classes, and that is the stock market, using S&P500 as an example (16:09). Also, companies are sitting on lots of cash. On the negative side there will most likely be limited growth and interest rates may come up.

Michael Mauboussin is advocationg much of the same thing about stocks (24:11).
http://www.youtube.com/watch?v=UW6T-1g81T0&feature=related

Personally, I'm quite hung up in the S&P500/gold ratio which bottomed at about 1 in the 1930'ies and in the 1970'ies. Now the cycle seems to repeat itself falling from a much more extreme overvaluation. Presently, the ratio has broken down below 8.

http://steadfastfinances.com/blog/wp-content/uploads/2010/07/Historical-SP-500-to-Price-of-Gold-Ratio-1900-to-2010-credits-Zero-Hedge.jpg

After the 1929 crash the gold price was fixed, but the stock market fell extremely deep. In the 1970'ies the stock market was struggling with making new highs while the gold price soared. This time I find it most likely with a scenario where S&P500 and gold meet on the middle, let's say at close to 5.000. I find it quite unlikely that the stock market soars and that gold soars even more, getting even at for example 20.000 in just a few years (but maybe some time during this decade). I also find it unlikely that gold will soar to about 10.000 in just a couple of years, but maybe gold could go to 5.000 and the S&P500 could stay at 10.000 giving a S&P500/gold ratio of 2. The bottoming ratio of 1 can come later in this decade.

Therefore, I personally still believe that the stock market can come lower in the short term, but then the stock market can become an very good play going forward. Or to put it differently, where the purchasing power will be preserved quite well when inflation really starts to come into play.

Presently, I think it is more or less only prescious metals that is a "safe" asset class AND that it will be a very good asset class for quite many years to come.

[blaavass]

I was a bit quick in the blog post above. I'm really talking about the Dow/gold ratio (not the S&P500/gold ratio) when expecting the ratio to get close to 1 and that the ratio presently has broken below 8.

Here you can see a chart of the Dow/gold ratio for the last 200 years.

http://www.sharelynx.com/chartstemp/DowGoldRatio.php

The ratio bottomed at 2 in the 1930'ies, while it bottomed at almost 1 just after 1980. The chart is interesting with regards to dividing between the gold standard era and the fiat era after 1913 after the US central bank was established. It shows larger and larger swings in the ratio as the currency system becomes more and more fiat.

Peter Schiff actually mentioned on todays radio show that he expects the Dow/gold ratio to reach about 5 on the short term, but lower on the longer term. I guess he thinks it will bottom when inflation is raging at its worst.

[blaavass]

Here is a guy that is expecting the Dow/gold ratio to reach 6 by looking at long term trendline without including the 1980 bottom, which he sees as an undershoot due to the overshoot in the 1960'ies.

http://home.earthlink.net/~intelligentbear/com-dow-au.htm

I would comment that we have seen an even greater overshoot around 2000. Overshoot and undershoot tend to be symmetrical in nature.

[blaavass]

Here is a Zerohedge post being very negative to stocks in the coming years.

http://www.zerohedge.com/news/guest-post-remind-us-again-why-anyone-should-own-stocks-next-two-years

In the blog post there is an inflation adjusted chart showing three crash-periods; the Dow crash in the 1930'ies, the NIKKEI crash in 1989, and todays S&P500 since the peak in 2000.

The charts shows a remarkable resemblance with regards to timing of bottoms and tops. What remains is the final bottom that is likely to come in 2012/2013 if the correlation continues.

However, the QE2 has prevented the rollover in 2009/2010 and we are now way above the other indexes, which could mean that we have a correspondingly harder fall ahead of us...(inflation adjusted)

The chart shows that the S&P500 was higher than the others in the recovery after the 2000, but crashed all the way down to the others in the 2008 crash. We know that the FED was very loose on the money in the 2000-years by having very low interest rates. This could also be an argument for the S&P going all the way down in the coming years to match the lows of the other crash periods.

[blaavass]

Good comments by Peter Schiff on the S&P downgrade of the US from AAA to AA+.

http://www.youtube.com/watch?v=SgNLTb58K_Y&feature=feedu

Personally, I think this downgrade marks the start of an accelerated death spiral for the US with higher interest rates, higher deficits and further downgrades. I also think that the US can't save itself through austerity measures. It will really mean giving up their empire and I don't think they will do that voluntarily.

This will be an interesting autumn for sure...

[blaavass]

Great interview from July with Felix Zulauf:

He believes in a frustrating sig-saw market until a bigger crash in 2014-2016.

Part 1:
http://www.youtube.com/watch?v=tTJQbjUmhwE&feature=feedwll&list=WL

Part 2:
http://www.youtube.com/watch?v=ivWgLGtijZM&feature=watch_response

Part 3:
http://www.youtube.com/watch?v=R22xi0uR0GM&feature=watch_response

Part 4:
http://www.youtube.com/watch?v=OVemEgvaHUQ&feature=watch_response

[blaavass]

It is interesting to see the intensity in the crisis expanding now.

This crisis does not look the same as in 2008. Note that while the stock market is crashing the dollar is hardly rising, but gold is soaring instead of going down as last time.

S&P500
http://quotes.ino.com/chart/index.html?s=CME_INX&t=&a=&w=&v=d12

Dollar index:
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d12

Gold
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=dmax

You might view gold as a currency equal to other currencies, but with the big difference that it can't be printed. It means that the market is going into cash, but not the into the dollar as in 2008. This time the cash is going into more sound currencies like Swiss Franc and gold.

At the same time the oil price has been dropping for a while and it might drop further if activity slows down hard in US. It is not unlikely that China can start to slow down for a while too.

Oil:
http://quotes.ino.com/chart/index.html?s=NYMEX_CL.U11.E&t=&a=&w=&v=d12

Energy is a large part of the cost side. Hm, the price is soaring for the product gold companies are selling and at the same time costs are going down. That should mean that profits will be soaring.

Of course, if the dollar starts to tank after the liquidating phase is over, the oil price will move up again. However, gold will increase even more and the argument will still be valid.

This might be the point in time where gold stocks start a catch-up race with gold itself. Watch out!

[blaavass]

What doesn't add up in the total picture now is the strong fall in interest rates on US treasury bonds.

10 years treasury notes:
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=5y;indic ator=volume;charttype=line;crosshair=cross;ohlcval ues=0;logscale=on;source=undefined

If the world is trying to get out of the dollar, then why pile into treasury bonds?

My personal theory is that it is mainly the private market that tries to get out of dollars. They are presently liquidating their positions in stocks, etc, and many of them go out of dollar and into other currencies and gold.

However, there are many countries in the world that want to keep their peg to the dollar or they intervene to keep their own currencies down. These interventions are short-term operations and they are not interested to invest in stocks, etc, and they don't care much about low interests on the money. It is very convenient for them to buy US treasuries because this is an extremely liquid market and large sums of money can be shifted very easily. I guess these operations are in some ways running on auto-pilot...

At the same time they might not be that focused on the dangers of loosing money, since it is short-term operations and they do not worry about a direct default by US in the near future.

On the other side, when countries around the world finally quit their pegs voluntarily or forced by the market, the dollar will loose a huge amount of support.

[blaavass]

James Grant:
I would define inflation not as too much money chasing too few goods, but too much money, and the thing that the redundand segment of money chases, varies from cycle to cycle. It could chase skirts like in the 70'ies when everything went up at the cash register, or it could chase stocks and bonds as in our own days when this form of inflation is called a bull market.

http://www.youtube.com/watch?v=m_WWGvxxvvs&feature=feedu

[blaavass]

Physical gold has been increasing in price steadily for many years now and really taken off lately. Gold has doubled in price since 2009:
http://quotes.ino.com/chart/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=dmax

However, the gold miners are not much higher now than in 2008:
http://finance.yahoo.com/echarts?s=GDX#chart1:symbol=gdx;range=5y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

Well, physical gold has doubled in price, while gold stocks have not moved. To me, it looks like the gold stocks have built a base in the charts for a long time and when they break up it will be powerful.

Note that the gold stocks have not followed the general stock markets down this time like they did in 2008. My guess is that when the downward pressure in the general stock markets are over, the gold mining stocks will take off upwards. This means that there is a rather short window of opportunity to get in before the breakout.

Note that physical silver has also been rising, and doubled in price since 2010. It has had a pull-back recently, but it seems to continue its bull move now.
http://quotes.ino.com/chart/index.html?s=NYMEX_SI.U11.E&t=&a=&w=&v=dmax

It could actually be a good opportunity to invest in silver directly through an ETF at this point:
http://finance.yahoo.com/echarts?s=PHYS#chart5:symbol=phys;range=2y;indicat or=sma(150)+volume;charttype=line;crosshair=cross; ohlcvalues=0;logscale=on;source=undefined

You can also see that the silver miner stocks have been building a base since late 2010 and should also be ready for a breakout upwards:
http://finance.yahoo.com/echarts?s=SIL#chart4:symbol=sil;range=2y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

I believe we are now at a point in time when the general market will start to take precious metals seriously instead of thinking that gold is a bubble that will pop any time. The general market might have been thinking that gold would come down again and therefore it has not been interested in investing in gold miners.

When the general market starts to believe that gold will actually continue to rise, the focus on the precious metals miners will totally change. As we can see on the move in the gold price, this change in perception of gold seems to be underway already.

[blaavass]

http://www.youtube.com/watch?v=pRVA71gkjx4&feature=feedu

[blaavass]

http://www.youtube.com/watch?v=YBj7dHrZkFo&feature=feedu

[blaavass]

Good comments from Peter Schiff on stocks, gold and goldstocks.

http://www.youtube.com/watch?v=9O-k5MX0EI0&feature=feedu

[blaavass]

Peter is explaining that gold stocks have been outperforming gold itself lately. This might mark a big change where more money is starting to move into gold stocks on a bigger scale.

http://www.youtube.com/watch?v=49fF2fIinQ0&feature=feedu

[blaavass]

It is interesting to see that a significant number of gold stocks have been consolidating for quite some time and are now looking like breaking out upwards.

Newmont Mining:
http://norma.netfonds.no//analysis.php?paper=NEM&exchange=N&from=20110117&to=20110805&period=500&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

Novagold:
http://norma.netfonds.no//analysis.php?paper=NG&exchange=A&from=20110123&to=20110811&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

Jaguar Mining:
http://finance.yahoo.com/echarts?s=JAG#chart3:symbol=jag;range=2y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

Minera Andes:
http://norma.netfonds.no//analysis.php?paper=MNEAF&exchange=O&from=20110123&to=20110811&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=&VOLUME=on&VOLUME-SHOW-AVERAGE=&VOLUME-PERIOD=14

[blaavass]

The ETF for Gold Miners is also breaking out upwards:
http://finance.yahoo.com/echarts?s=GDX#chart1:symbol=gdx;range=1y;indicator =sma(150)+volume;charttype=line;crosshair=cross;oh lcvalues=0;logscale=on;source=undefined

The ETF for Junior Gold Miners seems to be ready for breaking out upwards too:
http://finance.yahoo.com/echarts?s=GDXJ#chart4:symbol=gdxj;range=1y;indicat or=sma(150)+volume;charttype=line;crosshair=cross; ohlcvalues=0;logscale=on;source=undefined

This means that the whole Gold Miner sector is breaking out upwards.

[blaavass]

The present development in the OSEBX does not look like a strong bottom to me. Watch out for more turmoil...

http://norma.netfonds.no//analysis.php?paper=OSEBX&exchange=OSE&from=20090202&to=20090821&period=250&scale=linear&linewidth=1&height=350&width=700&ARITHMETIC-MEAN=on&ARITHMETIC-MEAN-PERIOD1-ON=&ARITHMETIC-MEAN-PERIOD1=10&ARITHMETIC-MEAN-PERIOD2-ON=&ARITHMETIC-MEAN-PERIOD2=30&ARITHMETIC-MEAN-PERIOD3-ON=on&ARITHMETIC-MEAN-PERIOD3=150&ARITHMETIC-MEAN-CENTERED=

[blaavass]

Niall Ferguson interview from 6th September.

http://www.youtube.com/watch?v=JDl_EISi4sE

[blaavass]

Great stuff. Peter Schiff testifying 13th September in front of congress on how to create jobs. Maybe the congress is slooowly waking up to reality and starts to understand how the real world works?

http://www.youtube.com/watch?v=FLmD9TeUC54

http://www.youtube.com/watch?v=xZbQGpf3D_Q

[blaavass]

CNBC interview with Peter Schiff after testifying before congress.

http://video.cnbc.com/gallery/?video=3000045400