When will the suckewrs rally pop?

[Valerie]

Boy, do I feel like SUCH a sucker for being up over twenty five grand since march.

 

[Mr.Fitnah]

The USA has devalued the dollar so much, it may have to repudiate the debt
The interest in Buying our debt is waining and has been for some time.

We cannot borrow at affordable rates or inflate out of this problem in any controlled manner.
Result global financial collapse.
Which could be the only thing to shrink the size of the federal government.

[ame=http://www.youtube.com/watch?v=SzmYI_4XCbM&feature=player_embedded]YouTube - Hyperinflation Nation Part 1/3[/ame]

 

[Paulie]

Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.

I believe the USD index was somewhere in the 60's at that point.

Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.

I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.

 

[Toro]

The USA has devalued the dollar so much, it may have to repudiate the debt
The interest in Buying our debt is waining and has been for some time.

We cannot borrow at affordable rates or inflate out of this problem in any controlled manner.
Result global financial collapse.
Which could be the only thing to shrink the size of the federal government.

YouTube - Hyperinflation Nation Part 1/3

I don't want to minimize the situation. I think the government is creating the conditions for other bubbles in the economy which will create massive distortions and probably pain down the road. I own a lot of gold.

However, you are simply flat out wrong with your facts. First, the US government has had no problem selling its debt.

The U.S. was able to sell another large amount of debt at low rates this week, as investors flocked to Treasurys to hedge against the risks of a slow economic recovery.

Foreign investors bought Treasurys this week even as the dollar sustained losses against a broad range of currencies, a move that erodes the investment value of holding U.S. government debt. Above, the U.S. Department of the Treasury, with the Washington Monument in the background, in Washington, D.C., is pictured last month.

The uncertainty about the expected pace of the rebound also is damping inflation expectations, encouraging investors to buy bonds. Long-dated Treasurys such as the 30-year bond bear the biggest risks in an environment of rising prices because inflation eats into bonds' fixed interest payments over time.

Foreign investors bought Treasurys this week even as the dollar sustained losses against a broad range of currencies, a move that erodes the investment value of holding U.S. government debt.

The indirect bids, a proxy of foreign demand for Treasurys, showed solid interest in the three auctions this week. The government sold a total of $70 billion in debt, including $38 billion of three-year notes, $20 billion of 10-year notes and $12 billion of 30-year bonds.

The indirect bids for the 10-year note auction Wednesday, a resale of the August issue, came at 55.4%, the highest on record for any such repeat offerings.

U.S. Debt Sales Chug Along - WSJ.com

And we can borrow cheaply. Right across the curve, interest rates are down.

At some point, we may have trouble borrowing and interest rates may be higher, but that is certainly not happening now.

 

[Valerie]

I own a lot of gold.

Nice! Gold hit an all time high today!

GOLD 100 OZ FUTR (USD/t oz.) 1006.400
Bloomberg.com: Commodity Futures

GCU09.CMX: Summary for Gold Sep 09 - Yahoo! Finance

Gold hits record high
The precious metal, considered a safe haven, surges above $1,000 as the dollar plunged to a one-year low.

Gold settles at record high of $1,006.40 - Sep. 11, 2009

 

[Toro]

Thanks.

I'm betting it goes much higher though.

 

[Valerie]

Thanks.

I'm betting it goes much higher though.

From the article above:

"This is new significant level for the dollar, said Kathy Lien, director of currency research for Global Forex Trading. "The dollar hasn't been this weak since September 2008."

In a jittery economy, commodities priced in dollars, such as gold, are perceived as "safe" investments and typically gain ground when the greenback wanes.

The dollar has declined against the yen for the fifth straight week and is at its lowest level against the euro since December 2008, according to Global Forex Trading.

"Gold prices have been holding up better now than in previous occasions when they tried to rally high. Many [investors] were waiting for the $1,000-mark to be broken," said Carlos Sanchez, a precious metals analyst at CPM Group. "The dollar has been weakening so that's been a supportive factor."

Gold will hold.
Analysts think gold will continue its upward momentum, at least for the next few months. CPM's Sanchez said he expects prices will hold above $1,000 mark as the year ends, even if the dollar rallies.

"You may see the dollar recover somewhat and put downward pressure on gold prices. But even if there's a pullback, gold will go back up the last 2-3 months this year," Sanchez said.

And if the dollar is headed lower, as Lien anticipates, gold prices could remain strong even longer.

"There will be relief rallies along the way, but I expect a 2% depreciation of the dollar against major currencies" over the next six months, Lien said.

 

[Valerie]

At some point, we may have trouble borrowing and interest rates may be higher, but that is certainly not happening now.

I think this is what should happen next. Borrowing has been tapped and will become tighter and savings should yield higher rates. Higher yields should draw more money into bank CDs and treasury bonds.

 

[Zander]

The collective S&P 500 companies LOST money for the year. That has never happened in the history of the S&P500. What is propelling stock valuations if there are no earnings? How long will corporations pay dividends when they have no earnings? Personally, the technical charts show that the dollar is forming a bottom and will rise. Commodities, Real Estate, and Stocks will all fall precipitously. Take your money off the table while you can. You've been granted a great gift with the dead cat bounce. The smart money is selling......Good luck!

 

[Toro]

Actually, that is almost true but not quite.

Here is the official data from S&P.

http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS

Earnings fell to $6.86 at the lowest point at the end of 2008. At one point in time, analysts' forecasts were such that earnings would have been negative had earnings not come in better than expected. Expectations were for negative earnings but it did not happen.

Stocks are being propelled by a recovery in earnings, and the fact that Depression and the collapse of the economy are off the table.

 

[Zander]

Actually, that is almost true but not quite.

Here is the official data from S&P.

http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS

Earnings fell to $6.86 at the lowest point at the end of 2008. At one point in time, analysts' forecasts were such that earnings would have been negative had earnings not come in better than expected. Expectations were for negative earnings but it did not happen.

Stocks are being propelled by a recovery in earnings, and the fact that Depression and the collapse of the economy are off the table.

I stand corrected, last QTR according to GAAP they lost money. Forgive me if I am still bearish as hell - The P/E ratio of the SP500 is now 130 x earnings. That is overvalued by any standard.

Personally, I am sitting tight in cash and t-bills. AFAIC, Deflation is mandatory. Every time any country has a massive expansion of CREDIT, the result is deflation. Deflation is a contraction of money and CREDIT in relation to available goods. The US has experienced two major deflationary periods (1835-42 and 1929-1932) both followed a period of substantial credit expansion. Banks currently, in aggregate, have loaned out 25% more than they have in deposits. Do the math.

Since no one cannot predict the exact moment that deflationary pressures will overwhelm the markets, I am content to ride it out, accumulating cash in the safest banks I can find. (some banks actually have reserves, go figure!) I have liquidated all of my stocks and mutual funds as of August 28th. I have never been more bearish in my life, and I am an optimist! If I am wrong I'll make a little less money. I can live with that.

 

[Toro]

There was also deflation off and on from 1873 through 1893.

I don't think we're going to get deflation. I think that the Fed is massively inflating the money supply to counteract the deflationary forces in the economy. That is the one big difference between now and the other deflationary periods in this country's history. I think the prices of gold, oil and other commodities are telling you that.

We may get deflation down the road but I think it is off the table for the next few years. I think the SP500 gets into the 1100s, perhaps going as high as 1200 before rolling over.

And gold? No idea. Probably $1500-$2000 when its all said and done, though $5000 is not out of the realm of possibility.

 

[Zander]

There was also deflation off and on from 1873 through 1893.

I don't think we're going to get deflation. I think that the Fed is massively inflating the money supply to counteract the deflationary forces in the economy. That is the one big difference between now and the other deflationary periods in this country's history. I think the prices of gold, oil and other commodities are telling you that.

We may get deflation down the road but I think it is off the table for the next few years. I think the SP500 gets into the 1100s, perhaps going as high as 1200 before rolling over.

And gold? No idea. Probably $1500-$2000 when its all said and done, though $5000 is not out of the realm of possibility.

You can print all the money you want, it is CREDIT deflation that you are not factoring in. The fed can't monetize the debt fast enough to counteract the inevitable credit contraction. Banks are overextended and the "over leverage" that made them fortunes in the last 10 years is now destroying them just as quickly. Commercial real estate is experiencing the largest drop in history and the effects on valuations won't show up for a while. When they do, REITS will collapse along with a few large Banks (watch out for Wells Fargo/Wachovia and Chase- they are really weak!) and the psychology of the consumer will change from the "green shoots" fairy tale that Bernanke/Geithner/et.al have spoon fed them to"brown manure" reality in a heartbeat.

 

[Mr.Fitnah]

Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.

I believe the USD index was somewhere in the 60's at that point.

Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.

I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.

I dont see how the dollar is not more devalued now wit the printing press running full time and expenditure surpassing the entire amount of actual printed monies.

 

[Toro]

There was also deflation off and on from 1873 through 1893.

I don't think we're going to get deflation. I think that the Fed is massively inflating the money supply to counteract the deflationary forces in the economy. That is the one big difference between now and the other deflationary periods in this country's history. I think the prices of gold, oil and other commodities are telling you that.

We may get deflation down the road but I think it is off the table for the next few years. I think the SP500 gets into the 1100s, perhaps going as high as 1200 before rolling over.

And gold? No idea. Probably $1500-$2000 when its all said and done, though $5000 is not out of the realm of possibility.

You can print all the money you want, it is CREDIT deflation that you are not factoring in. The fed can't monetize the debt fast enough to counteract the inevitable credit contraction. Banks are overextended and the "over leverage" that made them fortunes in the last 10 years is now destroying them just as quickly. Commercial real estate is experiencing the largest drop in history and the effects on valuations won't show up for a while. When they do, REITS will collapse along with a few large Banks (watch out for Wells Fargo/Wachovia and Chase- they are really weak!) and the psychology of the consumer will change from the "green shoots" fairy tale that Bernanke/Geithner/et.al have spoon fed them to"brown manure" reality in a heartbeat.

That's possible, but there is nothing stopping the Fed from expanding its balance sheet from $2 trillion to $4-$5 trillion. That would easily cover the coming commercial RE and prime loan losses ahead.

As for commercial real estate, I think everyone knows about it. Prime mortgage defaults are going to rise too. However, there is something like $800 billion in excess reserves on bank balance sheets, which should be enough to cover most of the losses.

If the economy is going to have another leg down, there has to be something bigger than what is already out there, probably something people don't know about. That may happen down the road as the unintended effects take hold from the enormous expansion of the liquidity in the system, but I don't think that is on the immediate horizon.

 

[Toro]

Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.

I believe the USD index was somewhere in the 60's at that point.

Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.

I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.

I dont see how the dollar is not more devalued now wit the printing press running full time and expenditure surpassing the entire amount of actual printed monies.

The dollar may hit a new low but the dollar hit at least a 40-year low under Bush.

 

[Mr.Fitnah]

Ok, well im done with you on this thread hack.

 

[Zander]

Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.

I believe the USD index was somewhere in the 60's at that point.

Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.

I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.

I dont see how the dollar is not more devalued now wit the printing press running full time and expenditure surpassing the entire amount of actual printed monies.

Are you familiar with the term Con-game? The "Con" is short for CONFIDENCE. Our entire monetary system relies on confidence. Ask yourself what is backing the dollar? Congress says the dollar is "legally" 1/42.22 of an ounce of gold. But it's not, and everyone knows that is bogus. If you bring a dollar to the treasury you will not collect any tangible good, much less 1/42.22 of an ounce of gold. You will be sent home. If you bring a dollar to the market you can still buy goods with it because the govt says (by fiat) that it is money and because of its long history of use has lulled people into accepting it as such.

So what is a dollar? The dollar is backed primarily by Govt Bonds, which are promises to pay dollars. Therefore today, the dollar is a promise to pay an identical promise. What is the nature of each promise? If the treasuery will not give you anything tangible for your dollar, then the dollar is a promise to pay NOTHING! The Treasury should have no problem keeping this promise...lol...

 

[Mr.Fitnah]

Repudiating the debt is the next step after crushing the dollar to these lows.

 

[DavidS]

Hi Mr. Fitnah:

GL,

Terral

Ah, proof that the crazies don't have to be out just during a full moon!