The boom is over?

laptop1

Experienced member
Messages
1,105
Likes
131
Many people are predicting a global depression worse than the 1930s in the near future.


Ignore the world's biggest central banks at your peril
(Filed: 29/05/2006)

Round one to the Bank of Japan, ultimate cause of the violent sell- off in stocks, commodities, and riskier bonds across the world over the past three weeks writes Ambrose Evans-Pritchard

Governor Toshihiko Fukui has bled more than $140bn (£75.3bn) from his banking system since March 9 to reduce a menacing overhang of liquidity left from the battle against deflation. He is halfway through.

No longer buying fistfuls of US Treasuries with printed money to hold down the yen, the Bank of Japan has been the silent force pushing up global bond yields this year by 0.8pc - the jump that really lies behind the market rout.

Or rather, it has stopped holding yields down to the lowest levels in a century. Japanese holdings of US Treasuries have fallen by $74.5bn since December. "We are reaching an inflection point in monetary policy," said Mr Fukui.

Inflection to some, bloodbath to others. The first casualties began to emerge on the fringes of the "yen carry trade" earlier this spring.

Hedge funds that had borrowed for zilch in Tokyo, to lend for a fat premium to overheating Iceland and New Zealand, began rushing for narrow exits.

The storm has since swept up much of the globe, setting off the steepest falls in emerging market stocks and bonds since the Russian default in 1998.

"Most people underestimated the effects of monetary tightening in Japan," said Phillip Poole, an economist at HSBC. "The liquidity that has driven these markets is being withdrawn."

The next Japanese spanner in the works will be the end of zero interest rates, or zirp as it is known. Bank-watchers have pencilled in July or September for the moment of reckoning.

Few investors lose sleep worrying about life after zirp, but our guardians at the Bank of International Settlements view it as the greatest imminent risk to global markets.

The Japanese have built up net foreign assets worth $2,500bn, investing abroad what they refused to spend at home during their 15-year slump.

Now they are buying again. Tokyo and Osaka land prices are ticking up smartly after falling 57pc since 1990. The IMF forecasts 2.75pc growth this year

"We are all going to have to look over our shoulder when Japan raises rates because nobody knows what is going to happen when all this money goes back home," said a BIS official.

Even so, round two may yet go to the European Central Bank on June
8 as Frankfurt's hawks lose patience with exploding M3 money growth, and a housing bubble threatening the viability of monetary union itself.

Housing loans (ex Germany) grew 19.4pc in the year to March, on top of the
17pc surge the year before. Spain is a disaster waiting to happen. In Portugal it has already happened.

Judging by the apocalyptic tone of the Bundesbank's May report, Europe is on the brink of a monetary shock going far beyond the mincing half- measures trickled out until now by Jean-Claude Trichet, ECB chief and French "soft euro" inflationist.

"There are immediate inflationary risks emerging," said the bank, citing monetary growth of 10.5pc as a "serious warning sign" that policy was too lax. The eurozone's HCIP inflation is now 2.5pc.

Mr Trichet - and his Club Med allies - can ignore the Bundesbank, as he did earlier this spring, reneging on a quarter-point May rate rise (to
2.75pc) already signalled to the markets.

But that way lies perdition, for the ECB has no more credibility than the Banca d'Italia without Buba's reflected glory.

On the warpath, the Teutonic-bloc is now trying to shame Mr Trichet's doves into doing their monetary duty. "There is no dispute that a further tightening of monetary policy is needed," said Austrian governor, Klaus Liebscher.

We have been warned. The ECB is about to bare its fangs for the first time since EMU. Germany is back, and a reawakened Buba is snorting with the same bloody-minded determination it displayed before causing the 1987 crash and the 1992 bust up of the ERM.

Yet round three must surely go to the US Federal Reserve with a
17th consecutive rate rise to 5.25pc - if we get that far.

Ben Bernanke was back-peddling fast in a letter to Congress last week, pleading that core CPI inflation "overstates" price rises. "Monetary policy must be forward-looking," he said.

Has the Fed already gone too far, baking a recession into the pie? Will the delayed effects of past tightening kick in, with mounting ferocity, just as the housing boom plummets into bust?

"Housing mayhem seems unavoidable. The US hard landing begins now," said Charles Dumas, global strategist at Lombard Street Research.

Mortgage applications are down 17pc in a year. House sales are down 5.7pc, and inventories of unsold new houses are at their highest since
1996. The central prop holding up the US consumer boom is crumbling, leaving behind record household debts equal to 127pc of disposable income.

"As the hard landing/recession arrives, it is the Asian exporters, the commodity markets and currencies, and especially the base metals that are likely to crash over the next year. The game is up for assets that have gone way too high on the basis of cheap funding and optimistic delusions," said Mr Dumas.

Teun Draaisma, Morgan Stanley's chief European equity strategist, had a warning for bargain hunters, even after the 8pc fall in European stocks and
15pc fall in the MSCI emerging markets index. "Do not be tempted to buy. The first violent part of this correction took nine trading days: the second part may well take several months," he said.

The world has enjoyed a magnificent boom for 24 years, punctuated only by light downturns along the way. The cycle has been kept alive beyond its natural life by ever-laxer monetary policy, feeding ever bigger asset bubbles and encouraging ever-higher levels of debt.

Central banks can draw down prosperity from the future for a while. In the end - now? - the future arrives.

Many people are predicting a global depression worse than the 1930s in the near future.

The Plutocracy are following the same scheme as WW2/WW1.
 
Last edited:
laptop1 said:
......
Many people are predicting a global depression worse than the 1930s in the near future.

The Plutocracy are following the same scheme as WW2/WW1.

clarify: "plutocracy", and "scheme" in context of WW1/2 please. thanks.
 
One thing that is important to consider is that anyone who attempts to predict what is likely to happen with the Global economy is almost always wrong.


Paul
 
Also it is not nice to go about unnecessarily frightening impressionable and defenceless readers in this way...:LOL:
 
Trader333 said:
One thing that is important to consider is that anyone who attempts to predict what is likely to happen with the Global economy is almost always wrong.


Paul

Usually it happens when they realise they were wrong and change their minds :)

In fact they weren't wrong, just early.
 
trendie said:
clarify: "plutocracy", and "scheme" in context of WW1/2 please. thanks.


The term plutocracy is formally defined as government by the wealthy, and is also sometimes used to refer to a wealthy class that controls a government, often from behind the scenes

1. Cause a great depression to get people in a mood for war and to force them to get jobs in the army to get any food.

2. Have a World War (this time US versus China) to weaken national ruling classes.

3. Set off a global pandemic to kill off surplus population (as Spanish Flu after WW1)

4. Bring in a stronger World Government 'to end all wars'. (WW1: League of Nations then WW2:United Nations this time WW3: New World Order?)

Step 4 is targetted for 2012 - so all previous steps have to fit in before that.
 
2. Have a World War (this time US versus China) to weaken national ruling classes.

Hmm, A bit risky with nuclear weapons that would inevitably be used.

Set off a global pandemic to kill off surplus population (as Spanish Flu after WW1)

This will be to kill off the 100 or so people left from the 200 that may survive the aftermath of the nuclear Winter I guess ?

Bring in a stronger World Government 'to end all wars'. (WW1: League of Nations then WW2:United Nations this time WW3: New World Order?)

The League of Nations and UN have been hopeless at any real form of control and based in this the NWO will similarly fail but with only 100 people to rule left they may stand a better chance.


Paul
 
laptop1 said:
3. Set off a global pandemic to kill off surplus population (as Spanish Flu after WW1)
Do you believe that this was, or will be, deliberate?
 
times have changed since two generations ago. the "wealthy class" and their money no longer has a fixed home.

world bodies like the un are generally impotent in times of great crises. the un was borne of the failure of the league of nations.

anyways the article suffers the fallacy of linear projection and selective vision.. worse than useless.

just my opinion.
 
Just found this on ET:LOL:

Quote from hypostomus:

To revivify a jingoistic slogan from the '60's (of the previous century), "Don't sell America short!". We are still the world's leading producer of pornography. We design and manufacture weapons that are second to none. We have countless ways to bamboozle and **** people with too much money and make them thank us for it. As the entertainment capital of the world we have an unparalled ability to stupefy the world's minds. We have the proven ability to make foreigners take our inflated currency, induce them to give it back to us by buying bubbly U.S. real estate at outrageous prices, and then deflate their investments away. We are demonstrably the cruelest people and nation on the planet. Soon we will be making oil out of pig****. We are enlessly inventive, and diabolically brilliant. The REAL problem is the threat of inflation. I think you must not be from here. I'LL help YOU get rich. Buy gold.
 
  • Like
Reactions: BSD
Many people are predicting a global depression worse than the 1930s in the near future.

Has there ever been a time when this was not the case?

For years now, every six months or so I've recieved a circular (I forget who from) predicting the same thing. The reasons vary slightly each time....oil prices, inflation, debt out of control, property price bubbles, gold prices, etc, etc. The lowdown being that if you sign up for this (expensive) report you'll be one of the few to make a fortune while everybody else gets wiped out!

Like "psychics" who make the same predictions year in and year out, I suppose they could be right one day.
 
For my 2ps worth,

I think we will see a new high on the Dow before the end of the year.

After that I think we will see a significant retracement - possibly back down to the 10,000 level.

Just my thoughts :rolleyes:
 
JillyB said:
For my 2ps worth,

I think we will see a new high on the Dow before the end of the year.

After that I think we will see a significant retracement - possibly back down to the 10,000 level.

Just my thoughts :rolleyes:

I'll second that.....
 
Not sure myself.... could go either way ... lol ....

I would like to think we will see the US in the beginings of some kind of recovery by the end of 2008

But I am not putting my hard earned cash on it... that I am sure about...
 
I'd like to ask this question: Which country or countries were not affected by the Great Depression, or were all at its mercy?

By the way, what's bigger than a great depression? Is it a world war?
 
Last edited:
For my 2ps worth,

I think we will see a new high on the Dow before the end of the year.

After that I think we will see a significant retracement - possibly back down to the 10,000 level.

Just my thoughts :rolleyes:

I favour the dow recovery this year view as well although I'm not seeing a lot of evidence currently.

If 2001 was like the 1921 recession and 2008/9 becomes like the 1929 recession then the 2 years of the early one is only a precursor the perhaps decade long "great" recession. The 2010s might be a tough decade and Asia will get bitten hard by this dog.
 
By the way, what's bigger than a great depression? Is it a world war?

Very much the opposite, WW2 resulted in the US economy having grown massively compared to when it started.


Paul
 
Very much the opposite, WW2 resulted in the US economy having grown massively compared to when it started.


Paul

That is one of the tragedies of life. When times get rough, let's have a war, flatten everything and start all over again.

Human nature being what it is how do you think that, if we head into a depression, it will end? Especially, if we have someone like Bush to get the ball rolling again?

There is a Spanish expression. "The human being is the only animal who will trip over the same stone twice".

Now that we do not have the Soviets as the villains of the piece, we are having problems with the Muslims. The fact is, the nuclear weapon has kept us at peace for half a century, otherwise we would have had a war with Russia, for sure. Maybe, we should thank God for someone to oppose us, so that we can get properous until they collapse. By that time, we may be looking at outer space. Lord knows what they've got!

Split
 
Well I keep seeing this chart that has a 60% drop in UK house prices and then a 160% rise in house prices, being spread around by some contrarians.
 
Top