The next banking crash?

[Naam]

12 hours ago, Black arab said:

Dot com sub prime and the next is coming so everyone is saying.

dot com wasn't a crash like subprime which affected virtually all financial assets, causing an international banking crisis and bank collapse. really burnt were only greedy investors in dot com stocks.

 

i agree that the next one is coming. this is only a matter of time.

[Black arab]

Does anyone think that stuff like uk premium bonds would still be safe if a big enough crash were to take place.

[Briggsy]

3 minutes ago, Black arab said:

Does anyone think that stuff like uk premium bonds would still be safe if a big enough crash were to take place.

I think UK premium bonds would be very suitable for somebody in your position. Do you think you might reach the £50,000 limit? Don't forget to check the prize draw details every month. You could be a winner.

[watcharacters]

On 9/19/2018 at 10:36 AM, Brunolem said:

What some members above don't understand is that in case of major inflation, or even hyperinflation, which is to be expected, as in some EM now, is that the price of gold inflates simultaneously, so that whatever the prices are, you keep your purchasing power, while those who are in fiat currency cash lose 10% or more every week, or month...

 

 

Another shout out for gold bugs.

 

I love fear mongers.

 

[watcharacters]

17 hours ago, Brunolem said:

Australia went into a bubble inflated by China.

 

When China will slow down or even stall, there will be a big noise made by the air escaping the Australian bubble, notably in real estate.

 

Ditto in Canada...

 

 

I.e.    if China Sneezes,  Australia will come down with the flu.

 

[watcharacters]

3 hours ago, Naam said:

dot com wasn't a crash like subprime which affected virtually all financial assets, causing an international banking crisis and bank collapse. really burnt were only greedy investors in dot com stocks.

 

i agree that the next one is coming. this is only a matter of time.

 

Of course there will be a crash.   That's historically correct.     The 64K $ question is when?

 

 

[Naam]

58 minutes ago, watcharacters said:

Of course there will be a crash.   That's historically correct.     The 64K $ question is when?

i think i will happen on a thursday about an hour after lunch.

[Peterw42]

2 minutes ago, Naam said:

i think i will happen on a thursday about an hour after lunch.

I just went to the ATM on the corner and out of service, I think it has begun. Its a $58k question now

[simoh1490]

A good article here about social media and groupthink has the potential to destabilise the economy, I can easily relate the article to TVF and Thai bashing and self-fulfilling prophecies.  https://www.telegraph.co.uk/business/2018/09/19/social-media-could-destabilise-economy-bank-england-warns/

[Peterw42]

3 minutes ago, simoh1490 said:

A good article here about social media and groupthink has the potential to destabilise the economy, I can easily relate the article to TVF and Thai bashing and self-fulfilling prophecies.  https://www.telegraph.co.uk/business/2018/09/19/social-media-could-destabilise-economy-bank-england-warns/

What is a bull stock market, other than an exercise in groupthink, self fulfilling prophecy ? Its just everyone buying into the positive rather than the negative. 

[simoh1490]

4 minutes ago, Peterw42 said:

What is a bull stock market, other than an exercise in groupthink, self fulfilling prophecy ? Its just everyone buying into the positive rather than the negative. 

You're talking about the herd, I'm talking about (and I think the article is also) people going against fundamentals and fact. Brokers don't follow the herd or mass market, they make markets, when they're going one  way and social media is advising the opposite, as in now, that's a risk.

[Peterw42]

Just now, simoh1490 said:

You're talking about the herd, I'm talking about (and I think the article is also) people going against fundamentals and fact. Brokers don't follow the herd or mass market, they make markets, when they're going one  way and social media is advising the opposite, as in now, that's a risk.

But the current US stock market isnt going up based on fact or fundamentals,

[simoh1490]

1 minute ago, Peterw42 said:

But the current US stock market isnt going up based on fact or fundamentals,

Is it not? Is it not going up because of demand based on a pro-business President and his policies on trade?

[Lacessit]

2 hours ago, watcharacters said:

 

I.e.    if China Sneezes,  Australia will come down with the flu.

 

There is an article on ABC news that the RBA board considers the Australian dollar will appreciate if there is a full-scale trade war. Presumably that's based on it becoming a safe haven currency, or the US dollar depreciating.

[Peterw42]

3 minutes ago, simoh1490 said:

Is it not? Is it not going up because of demand based on a pro-business President and his policies on trade?

I suppose that one way of looking at it but its still speculation rather than fundamentals. Are companies reporting record profits/growth etc (other than the ones holding their own , or others, shares). I tend to think its more to do with everyone knows there is a president that wont stop the party no matter how drunk everyone gets.

It doesnt take long before a company works out there is more money to be made just buying shares, rather than build a new factory. Thats then a pyramid scheme, everyone buying shares in each others companies and nobody actually makes anything.

 

If the markets are rising or falling on fundamentals I would be concerned that rubbish on social media could have an effect. I tend to think markets rise on speculation and fall on fundamentals, everyone stops drinking the koolaid

[Brunolem]

2 hours ago, simoh1490 said:

A good article here about social media and groupthink has the potential to destabilise the economy, I can easily relate the article to TVF and Thai bashing and self-fulfilling prophecies.  https://www.telegraph.co.uk/business/2018/09/19/social-media-could-destabilise-economy-bank-england-warns/

Social media are the new scapegoat for everything, from Trump being elected thanks to a few posts on Facebook, to initiating an economic collapse!

 

How convenient for those supposedly in charge!

[simoh1490]

52 minutes ago, Brunolem said:

Social media are the new scapegoat for everything, from Trump being elected thanks to a few posts on Facebook, to initiating an economic collapse!

 

How convenient for those supposedly in charge!

One only has to read the average thread on TVF to understand this is true, the herd follows the prefered line and for the most part ignores fact and body slams anyone who doesn't follows.

[lannarebirth]

On 9/18/2018 at 6:46 PM, davidst01 said:

cant wait for things to correct. many australians dont think that property prices can decrease. many didnt live through the 80s with interest rates above 10%

 

I remember very well. I bought my first house at 19 years of age, getting a loan assumption at 8.00%. I thought I was paying too much frankly and then things went completely haywire.

 

https://www.google.com/search?q=historic+interest+rates&rlz=1CAACAR_enUS745US745&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjF4dqKzc3dAhVQ3FMKHWh2DccQ_AUICigB&biw=1366&bih=592#imgrc=rFeObh-Jwu3-XM:

[Just Weird]

.

[lannarebirth]

On 9/18/2018 at 10:31 PM, Thaidream said:

 

I would seriously doubt there would be a huge financial crisis bigger than 2008 as Governments and banks are fully aware of what caused the crash of 2008.  

 

 

 

If by "fully aware" you mean that governments and banks are fully aware that they created the crisis themselves then I would agree with you. I'm not sure what's changed frankly.

[rumak]

On 9/19/2018 at 11:56 AM, Ks45672 said:

Stay hedged over several major currencys, mixed basket of stocks, property, gold and Bitcoin and cash etc 

 

If they all go to zero at once , we are looking at a mad max situation so the best thing to stock. Up on is  water, tinned foods and plenty of ammunition... ? 

I have a warehouse full of beer waiting for the crash.   Should bring me a good ROI

[rumak]

35 minutes ago, lannarebirth said:

 

If by "fully aware" you mean that governments and banks are fully aware that they created the crisis themselves then I would agree with you. I'm not sure what's changed frankly.

 

[lannarebirth]

On 9/19/2018 at 2:30 AM, Brunolem said:

Simoh, if I may...

 

Don't forget that the whole financial industry, on which countries like the UK almost entirely rely, is based on debt!

 

It makes money creating, selling, bundling, reselling, debt, not assets.

 

Assuming that it would be possible to somehow erase the debts, it would simultaneously erase the financial industry.

 

On top that there would remain the pesky problem of dealing with quadrillions, not trillions, of derivatives which, for the most part, are linked to debt.

 

Finally, one would have to assume that all the concerned entities, worldwide (globalization) would play ball, which would be highly unlikely since creditor countries would not exactly be happy to write off billions of foreign debts which to them are assets...

 

You raise a lot of valid points but as it applies to the UK I'd say the packaging of debt is merely a footnote compared to their much more lucrative schemes of money laundering, tax evasion/avoidance and high comission dodgy investment "products".

[Ks45672]

22 minutes ago, rumak said:

I have a warehouse full of beer waiting for the crash.   Should bring me a good ROI

I will be your best customer

 1oz of gold per beer sound OK? ? 

[lannarebirth]

On 9/19/2018 at 10:55 PM, Naam said:

i think i will happen on a thursday about an hour after lunch.

If you're looking for the lowest tick, an important axiom to remember is that markets never bottom on a Friday.

[NCC1701A]

On 9/19/2018 at 3:29 PM, JG27 said:

so true, we had money on term deposit @ 16% . I dream constantly of a return as do most if not all retirees.

yes 1981 prime rate was 16% if I recall. I had a mountain of cash back then. But I had a friend who had a 5% over prime rate FLOATING business loan that he got when the rate was low. He had to hand his equipment back to the bank. It was sad for him.  

[CGW]

45 minutes ago, NCC1701A said:

yes 1981 prime rate was 16% if I recall. I had a mountain of cash back then. But I had a friend who had a 5% over prime rate FLOATING business loan that he got when the rate was low. He had to hand his equipment back to the bank. It was sad for him.  

I had $20,000 in a account in Singapore in 1981 that was earning 18% - I thought I was a made man ? 

How wrong I was ? 

[Naam]

3 hours ago, CGW said:

I had $20,000 in a account in Singapore in 1981 that was earning 18% - I thought I was a made man ? 

How wrong I was ? 

cash during high interest periods was always only a temporary winner. the real money was made locking in for 20 and 30 years. e.g. i bought one bond United Mexican States in 1982 when a dozen emerging countries defaulted (denominated in GBP) that carried a nominal interest of 16.5%, maturity 2008 = yield to maturity >25% at an average price (several purchases 1982 till 1985) in the mid 80s and sold in 1994 at 154.

 

end of the 70s British Gilts yielded 12-14% and one could buy maturities till 1998 cashing in that fancy rate (U.K. rating AAA!) for 20 years. although i never met them i considered five chancellors of the exchequer who paid me twice a year fat coupons very dear friends who's part made it possible to retire comfortably at age 46. today i wouldn't touch "GBrexitP" and gilts with a long barge pole.

 

[Jimbo2014]

On 9/19/2018 at 3:02 PM, Brunolem said:

You make it seem as if it was linear, a repeat of the same thing every ten years or so, when in fact it is exponential, each crisis being much bigger than the previous one.

 

Not going back too far, in 2000 and 2008, interest rates were at their usual average level of 5%, and not between 0 and 2% as they stand these days, depending on the countries.

 

So, reducing interest rates meaningfully is a tool no longer available to the central banks.

 

On top of that, the amount of debt on the balance sheets has grown massively between each crisis, and especially since 2008, so much so that the amounf of QE required will be gigantic the next time.

 

And there is always a limit in using the printing press, until faith in the concerned currency is lost and hyperinflation strikes, as it has happened many times in the past, and will happen again.

 

Finally, don't forget that, contrary to the previous crisis, the financial markets today are in the hands of the central banks...just look at the portfolios of the SNB or the BOJ...

 

So, if these markets crash, so do the central banks which, on top of "saving the world" will have to save themselves!

 

The next crisis will be somehow like the one of the 1930s...no way out, save for...(see my previous post)...

I agree with all you say.  Added to the magnitude of the crashes is the wealth polarity apparent in the world today as well as a possible weakening in demand for the USD.  The next crash could well be our great depression.  Im certainly maintaining a positive balance sheet and staying at about 25% - 30% cash in event of buy opportunities. 

However, I believe there are a few mitigating circumstances which may affect the outcome.  I think governments will risk hyperinflation to prop up banks.   In addition Africa and Asia (more so Asia) is still a rapidly developing regional economy.  China is a government controlled economy and will soon be larger than the US with a larger middle class than the entirety of Europe. Indonesia is a very young and rapidly developing economy as is Philippines and India.  Agreed debt is still the highest ever in all countries which is a massive concern.  Its going to be hard to predict what the next big dip will be like and whether it will grind the world economy to a halt or set some countries in a backwards motion.  

[Brunolem]

1 hour ago, Jimbo2014 said:

I agree with all you say.  Added to the magnitude of the crashes is the wealth polarity apparent in the world today as well as a possible weakening in demand for the USD.  The next crash could well be our great depression.  Im certainly maintaining a positive balance sheet and staying at about 25% - 30% cash in event of buy opportunities. 

However, I believe there are a few mitigating circumstances which may affect the outcome.  I think governments will risk hyperinflation to prop up banks.   In addition Africa and Asia (more so Asia) is still a rapidly developing regional economy.  China is a government controlled economy and will soon be larger than the US with a larger middle class than the entirety of Europe. Indonesia is a very young and rapidly developing economy as is Philippines and India.  Agreed debt is still the highest ever in all countries which is a massive concern.  Its going to be hard to predict what the next big dip will be like and whether it will grind the world economy to a halt or set some countries in a backwards motion.  

Since the economies and the financial markets are now almost totally controlled by the states and their central banks, it seems unlikely that the crash will start from there.

 

It's like plucking holes in a dam with the fingers...they think they have things under control but soon enough another hole appears somewhere else and there is no finger left.

 

The most likely is a geopolitical crisis, already underway in the US and EU, that will intensify until it reaches the breaking point.

 

The elites are totally disconnected from the populations, hence Trump, Brexit, Italy, Hungary and so on...and despite these signs of rebellion, these elites refuse to change tack, and instead push for more of what has been rejected (globalisation, immigration...).

 

There are too many unsustainable situations (public and private debt, retirement funds, bankrupt cities...Chicago...and states, trade wars, sanctions...you name it) for the system to hold much longer.

 

Something has to give and will give...