So what's going to happen

[Antediluvian]

The US's standard of living is going to go down a lot for awhile and they also question how long it will take.

and how low can you go


bingo.


or is it bongo.

[PokeSmot42]

A new form of energy wont be discovered/synthesized till the next millennium. So drilling will become a must and blah blah ppl be upset, the hippies cry, we breath toxins get cancers and such. plus the debt we have encountered will most likely get worse with the Novi obama in place but who cares he is better, keep us safe from stubby armed mccain who is a war hungry, cynical douche.

[Antediluvian]

inflation, recession, depression ,.....war.

[Antediluvian]

A BLACK SWAN
(RECESSION 2008…DEPRESSION 2009?)

Aubie Baltin CFP. CTA, CFA, Phd. (retired)

What is a Black Swan? Before the discovery of Australia, empirical evidence told us that all swans were white and that belief lasted for 100s of years until a Black Swan was spotted in the wilds of Australia. A Black Swan is a sudden unforeseen event that suddenly changes everything about our long held beliefs.

The significance of the Black Swan is that up until the Bear Stearns Hedge Fund affair, everyone was convinced that we and the rest of the world were in a Goldilocks economy and the world's stock markets were all going up, up and away for years to come. After all, with 3 billion new consumers and 10% a year growth rate, what could stop it? Any and all potential negatives were quickly swept under the rug. We were in a new paradigm and all the Natural Laws of economics, such as supply and demand, the business cycle, money supply and interest rates and the fact that trees can't grow to the sky no longer applied. The fact that we were in the longest period in our stock market history without a 10% correction only served as proof positive that we were in a new paradigm, with no thought given to maybe it is a warning that we were past due for a severe correction at best.

MARKET CORRECTION OR CRASH?

We have been in a 10% per year Fiat Money and CREDIT explosion since 1987; at that rate the money supply and debt double every 10 years (our total Debt Load has doubled in the last 6 years alone). Even though you can fool all of the people some of the time or even most of the time, the trouble is that no matter how low the Interest Rates are, they too are compounding and adding to the overall debt load until we are eventually CRUSHED by the no longer bearable load. Please keep in mind that inflation has always been a monetary phenomenon. We have been in a Guns and Butter Economy for 4 years now and as massive deficits accumulate in conjunction with all time high commodity prices, they want us to believe that there is no INFLATION. Well, the collapse of the Bear Stern's Hedge Funds was a BLACK SWAN; that unexpected event that let the FEAR Genie out of the bottle, and the Bubble Burst as everyone seemed to come to their senses virtually over night.

THE BIGGEST BUBBLE IN RECORDED HISTORY

For the first time ever, every one of the world's stock markets were breaking out to new all time highs; with the biggest moves being made by the most illiquid and riskiest Bourses. Let me remind you about how the Natural Laws of the Pendulum and the Reversion to the Mean works. #1 Nature tells us that everything eventually reverts to the mean and #2 the higher the pendulum swings to one side, the higher it will go when it eventually reverses. Using what ever measures you choose, the Bubble that we are now in is even larger than the 1929 Bubble and you all know what followed when that bubble burst.. Like then, the Democrats, now in control of Congress, are working on one Bill after another in their attempt to replicate the 1930's legislation; from raising taxes (on the rich) to anti-trade bills all the way to anti- business, pro-union legislation. One new spending program after another is being proposed every time Hillary speaks. Senator Schumer's proposed 27% tariff on all goods from China, should it pass, will not only unleash a trade war, but it will shoot inflation to the moon and completely tank the Dollar. Unfortunately it is not just Democrats who are espousing anti-trade sentiment.

I've been writing for three years now about the possibility of an FDR of the 21st Century coming to power, all the while praying that this would be one projection in which I was completely wrong.

Do you realize the daily dollar amount of stock market trading is now larger than three times our GDP? You can't have 40% of all business locked into just trading fiat paper back and forth indefinitely without running into some very severe trouble. I could go on all night, but there is no point as I have already outlined one problem after another in great detail in my past letters.

FEAR TRUMPS GREED

When it comes to the stock market and the economy, what matters most is the availability of money, which is directly related to the level of investor CONFIDENCE and the FAITH lenders have in being repaid: Not the rates or purported Interest Rate stance of the FED. For almost three years, the yield spread between Junk and Treasuries had dropped from a high of 15% in the 80's to under 3% signaling an almost complete lack of fear. SUDDENLY, the Bear Stern's Hedge Funds opened everyone's eyes to the realization that the "Emperor had no clothes." The FEAR GENIE was now out of the bottle as Risk was attempted to be re-priced virtually overnight and the world woke up to history's biggest liquidity crisis. Cutting, instead of raising rates by 50 basis points, has only served to reinforce the FEAR factor and accomplished the exact opposite of what the FED was trying to do and the world's central banks have had to pump over a $trillion into the banking system in order to avoid a complete financial system melt down. Mark my words "We ain't seen nothing yet." This weekend's meeting of Finance Ministers of IMF members accomplished absolutely nothing for the simple reason that either they don't know what to do OR if they do know, it is not politically palatable; so they continue doing the wrong but politically acceptable thing like cutting interest rates until it is too late. Doing more of what got you into trouble in the first place is moronic.

WHERE TO NOW?

Suffice it to say that once the unexpectedly disappointing 3rd quarter earnings reporting is over and we retest the August lows, it is still possible that we might get one last media assisted trumped up orgy of buying; probably triggered by a 50 basis point rate cut, that will push the DJII to a new high, but it will be accompanied by all sorts of negative divergences and it will be the only Index that has any chance of making a new high. Trading and breadth will be light and you will have a better chance of making money in Vegas then you will trying to play this last hoped for rally.

CATS AND DOGS

A bull market is never over until the cats and dogs run.. Well, the mid and small caps have led the markets for over three years now, but unlike the last three years, they did not make new highs this time around. They will now lead the market on the way DOWN as whatever is left of investor confidence is channeled into the Safe (?) International Big Caps.

As all my faithful readers know, the Markets and especially GOLD have been behaving almost exactly as expected. In my Sept. 22nd letter, although I did not (by definition) see the Black Swan coming, I did warn you about what the Black Swan has exposed and its associated consequences. Only my timing was slightly off as I had assumed that the Market's new high would be made in December or the first week of January after first having tested the August lows. Nevertheless, I strongly recommended that you sell into any rally and continue to hold on to your core Gold positions and to accumulate more Gold and quality Gold shares on all dips.

WHAT NOW?

Look for earnings disappointments and/or the lowering of earnings projections at best. The safest way to play this market is from the short side: Keeping in mind that the market is not yet ready for a one way ride. Long held beliefs die hard. It will behave more like a roller coaster; so unlike Gold, with the market you sell the rallies. But keep your patience, it is still a might early to chase the market down.

After almost two years of steadily falling Real Estate prices, the experts are now only just beginning to admit that the Bubble has burst, but they are still forecasting a bottom is just around the corner. My friends, look at Japan or our last burst real estate Bubble; the final bottom is at least 10 or 15 years away for both real estate and the stock market.

GOLD

Has just completed a perfect Elliott five wave move, which was subdivided into Wave 3 being 2X Wave 1 and Wave 5 equal to Wave 1 all of which is only Wave I of Wave 3. The Wave 2 pull back should be shallow, back to only approximately 725 to 730 (on the GLD.) We are still early into a major Bull Market in Gold. Continue to buy on weakness. Only this time you can start accumulating the quality mid-size companies that have not moved very much during this last Gold Rally as well as the juniors that are beginning to show some strength on the charts. Not to worry, there is always a Bull market somewhere ,this time its Gold.

Note: I never recommend individual stocks, so please don't ask me.



GOOD LUCK AND GOOD BLESS



Aubie Baltin CFA, CTA, CFP, Phd. (retired)
Palm Beach Gardens, FL
aubiebat@yahoo.com
561-840-9767

23 Ocrober 2007

sometimes ya read the damndest stuff.

[Ego Tripping]

Originally Posted by The Rev

Dipshits will panic, and others will benefit by it.



The Rev

For sure. There are those who thrive in a recession or a depression, just depends on how well you can serve the people.

Originally Posted by Smaerd

well what I was saying is clinton made laws to give everyone an eaqual chance at a mortgage or something I thought, and because of that a bunch of hood people got homes couldn't hold them so now their getting them taken away and the company is hurting from the loans. I am probably wrong but that's what I heard. Trust me I am pro bill clinton, he didn't inhale got the tastey beeg, got us money, etc,etc.

That's exactly what NPR was saying about Clinton but really the weight of it all is on the loan companies who never really decided to think in advance what would happen in all that debt was never paid back.

In my opinion, this recession is the best thing that ever happened to our economy as of late. People are buying less, appreciating more. There's less travel so there's more focus on community building. I can drive along the highway and see the shitloads of tract homes under construction that were never going to be bought, now finally stopped in their tracks. It's beautiful! It's only going to get "worse", which to me means better. The financial system has to go through a thorough house cleaning and this is simply the system correcting and cleaning itself, as well as people finally being put in check in regards to their relentless consumerism.

Either way I'm not gonna die, I'll just grow some food and live better then I was before haha.

Exactly dude.

Speaking of which, time to turn off the PC and go have a fire, smoke a bowl and enjoy some local organic wine.

[SpankyMcLankey]

Originally Posted by Ego Tripping

Exactly dude.

Speaking of which, time to turn off the PC and go have a fire, smoke a bowl and enjoy some local organic wine.

Where and how are you going to grow your own food to support your self year around? (not talking to you specifically, but every one)



What exactly is organic wine? Or should I say, isn't?



Don't you think that this is really just natural population control/ survival of the fittest at it's best?

[NickNasty]

Originally Posted by OldMan&TheWeed

I predict that the dollar will take a deep, fast plunge in value. Slowly wages will catch up with prices, but until then, there will be much suffering.

When the dust settles these will be the good ole' days.

sounds about right. government will step in with more stop-gap measures and Fed-inflated 'stimulus' checks to try and restore consumer confidence but of course will only prolong the agony by making inflation worse. If unemployment jumps again you'll probably also see an even more vast expansion in government hiring in security and law enforcement especially. Neo-Keynesianism FTL.

[Waves]

short version: we're fucked

[SpankyMcLankey]

Originally Posted by Waves

short version: we're fucked

[Ego Tripping]

Originally Posted by SpankyMcLankey

Where and how are you going to grow your own food to support your self year around? (not talking to you specifically, but every one)

You do what you can, you know? I really try and focus on the community, because you can't do it alone. I'm just trying to obtain as much food as possible from as many local sources that I can.

What exactly is organic wine? Or should I say, isn't?

Organic wine = wine made from organic grapes (no pesticides and sometimes are even biodynamic) as well as no sulfites added (sometimes).

Don't you think that this is really just natural population control/ survival of the fittest at it's best?

No, not really.

[my_scatterheart]

It's gonna hurt a lot of people in regard to their homes, my pop being one of them. And it's a terrible thing to watch, but it could be so much worse. I'm tired of people acting like this is the end of the world. God forbid we have to live like everyone everywhere else. Jesus, there are millions far far far far far worse. I sympathize for all getting smacked around by our economy, but is it the end of the world? Absolutely fucking not. Maybe the US will smarten the fuck up for once.

[Bad dog]

The writings on the wall and it say's, " DEEP SHIT UP AHEAD ".
My prediction is that the west will go to war with the Iranians, re-conquer the oil states and nationalise the oil.

War will be the only way out of the mess.

Of course in the beginning it will make it even messier, but in the long term the only way the can keep the bubble going is going to be by having very cheap oil.

[bongobongo]

Originally Posted by Antediluvian

bingo.


or is it bongo.

oh ya baby let me cum in your mouth

[higherthanamile]

You 'chicken littles' and I'm not naming anyone specifically here, you know who you are, crack me up.

1st...

Even with what has happened in the financial sector this year, through the 80's nd 90's there was a much larger amount of bank failures.
1. Continental Illinois National Bank and Trust, Chicago (1984)
Total assets: $40.0 billion

2. First Republic Bank, Dallas (1988)
Total assets: $32.5 billion

3. American S&LA, Stockton, Calif. (1988)
Total assets: $30.2 billion

4. Bank of New England, Boston (1991)
Total assets: $21.7 billion

5. MCorp, Dallas (1989)
Total assets: $18.5 billion

6. Gibraltar Savings, Simi Valley, Calif. (1989)
Total assets: $15.1 billion

7. First City Bancorporation, Houston (1988)
Total assets: $13.0 billion

8. Homefed Bank, San Diego (1992)
Total assets: $12.2 billion

9. Southeast Bank, Miami (1991)
Total assets: $11.0 billion

10. Goldome, Buffalo (1991)
Total assets: $9.9 billion

^that list ranks bank failures through 2007. In fact, since 1934, there have only been 2 years when there weren't ANY bank failures: 2005 an 2006. In 1989 there were 534 bank failures.

During the savings-and-loan crisis (1986-95), 2,377 banks failed, representing 67 percent of the 3,559 bank failures from 1934 through May 2008. At the peak of the crisis (1988-1989), 1,004 banks failed, a rate of one failure every 1.38 days.

Bank Failures by Decade

2000-2007: 32
1990-1999: 925
1980-1989: 2,036
1970-1979: 79
1960-1969: 44
1950-1959: 28
1940-1949: 99
1934-1939: 312

2nd...

I've throw this on the table in these discussions before. There is a whole shitload of investors that do nothing but play the Bear side of the market. This past week Lehman put contracts outnumbered calls 3-1, and everyone of those bastards exercised and forced the clearinghouses who sold the puts to them to PAY UP.

3rd...

The losses that have been talked about in the media and by some posters here are ON PAPER ONLY, and aren't considered losses until the position is closed in a persons account, through their instructions to liquidate.

Excuse me if my post comes off as though I'm sitting on the high horse, because that is not my objective. It is simply to rope you guys in from the 'panic storm' the media creates to garner your viewing time for their shows. Most of you fuckers have the ability to critically think in a larger capacity than those who criticize us for being 'burnout stoners' but you let yourselves get carried away with this bulljive, man.

Lastly, if you are losing money in the market than you have leveraged yourself irresponsibly, gave little or no consideration to diversification of your investments, or were complacent about watching your money and the sector its in. IT'S YOUR FAULT.

[Ego Tripping]

^ great post.

Paranoia strikes deep in the heartland
But I think it's all overdone
Exaggerating this and exaggerating that
They don't have no fun

I don't believe what I read in the papers
They're just out to capture my dime
I ain't worrying
And I ain't scurrying;
I'm having a good time

- Paul Simon

[OldSchoolStylee]

Man this is goign to have complete world wide ramifica..OH LETS SEE WHAT MICHELLE OBAMA IS WEARING HOW WILL THIS EFFECT THE ELECTION

[Jakeisuseless]

Peoples such well as myself will keep on keepin' on like they always have.

Other than that, from what I can tell, It could be worse.