The Worst Is Not Behind Us !

[VegasVic]

Ever see this?

Flying, you are becoming more and more like your goldbug bretheren every day! Giving links to youtube as a news source? Whats next, links to goldbug nesletters to show that gold will go to $2000/ounce in 2009 Merry Christmass my friend, enjoy those elevated levels of PM's because the gold bubble is about to burst in January after the next round of hedge fund redemtions and ECB and BOE rate cuts (not too mention the coming Yen devaluation)

[VegasVic]

My crystal ball/spider senses say the first month or two of 09 will see a very nice rally in the Dow.....Then bye bye birdie

My crystal ball tells me just the opposite (well almost). I see another round of hedge fund selling sending the DOW down to test its 52 week lows in January and then there will be selected bargains to pick up or at least trade (my crystal ball can't see out more than a couple of months in this environment, quite frankly anyone who says they can see out 6 months or more is FOS). My crystal ball also sees new 52 week highs in the dollar early in the new year as the Yen gets devalued, the ECB, BOE and Aussie central bank all are forced to make substantial rate cuts (the BOE will eventually ned to go to 0%) and oil falls to further multi year lows

[Mighty Mouse]

...... the gold bubble is about to burst in January after the next round of hedge fund redemtions and ECB and BOE rate cuts (not too mention the coming Yen devaluation)

Will this all happen before or after the US bond market crashes?

[flying]

Ever see this?

Flying, you are becoming more and more like your goldbug bretheren every day! Giving links to youtube as a news source? Whats next, links to goldbug nesletters to show that gold will go to $2000/ounce in 2009 Merry Christmass my friend, enjoy those elevated levels of PM's because the gold bubble is about to burst in January after the next round of hedge fund redemtions and ECB and BOE rate cuts (not too mention the coming Yen devaluation)

Sticks & Stones may break my bones .....So please dont throw any sticks or stones...

No Vic the reason I posted that is it was one of the best simple explanations of how the CPI/CP-Lie works. I thought he did a good job of showing that.

I am wondering about a increase this Friday on the Gold side of my PM's...Something has come available but I am a little sheepish mainly because my adjusted cost so far is still under eight but............It is getting so hard to find coins these days I am tempted

Merry Christmas Buddy!

Edited December 24, 2008 by flying

[stumonster]

the BOE will eventually ned to go to 0%

the FED rate is only 0.25% now, why will the money go to USD ?

[BlackJack]

cashed up CHinese buying up large amounts of houses and condo's in USA

China and Japan not propping up the bond market any more

as they are using money to stimulate their own economy

watch the US $ go down against other currencies now

my safe bet will be the OZ dollar

when the American public works out that the bail out funds are largely going on CEO annual salaries (up to 60 million per year) and bonus's their should be trouble in the streets.

wake up people

[Naam]

cashed up CHinese buying up large amounts of houses and condo's in USA

China and Japan not propping up the bond market any more

as they are using money to stimulate their own economy

watch the US $ go down against other currencies now

my safe bet will be the OZ dollar

when the American public works out that the bail out funds are largely going on CEO annual salaries (up to 60 million per year) and bonus's their should be trouble in the streets.

wake up people...

...and listen to a dreamer

[Gary A]

It is my opinion that I know as much about what is going to happen as the experts. The fact is that I know nothing. Furthermore I refuse to worry about things that I have absolutely no control over. The remainder of my nest egg will remain in the sorry equities that I already own. Either they will go up or they will not. I'll stick around for the long term and take my chances.

[Naam]

It is my opinion that I know as much about what is going to happen as the experts. The fact is that I know nothing. Furthermore I refuse to worry about things that I have absolutely no control over. The remainder of my nest egg will remain in the sorry equities that I already own. Either they will go up or they will not. I'll stick around for the long term and take my chances.

we could form a club if the hurdle "investing in equities" did not exist

p.s. please define "long term"

[MJP]

the BOE will eventually ned to go to 0%

the FED rate is only 0.25% now, why will the money go to USD ?

Perhaps to buy lots of extremely cheap, fire sale liquidated US assets using extremely cheap US Dollars?

[flying]

the BOE will eventually ned to go to 0%

the FED rate is only 0.25% now, why will the money go to USD ?

Perhaps to buy lots of extremely cheap, fire sale liquidated US assets using extremely cheap US Dollars?

From what I read & it does make a little sense I guess in this nonsense world ....... Folks feel it is safer than a mattress or a bank. They feel USA will not declare bankruptcy.

Edited December 27, 2008 by flying

[Gary A]

It is my opinion that I know as much about what is going to happen as the experts. The fact is that I know nothing. Furthermore I refuse to worry about things that I have absolutely no control over. The remainder of my nest egg will remain in the sorry equities that I already own. Either they will go up or they will not. I'll stick around for the long term and take my chances.

we could form a club if the hurdle "investing in equities" did not exist

p.s. please define "long term"

Long term is defined as as long as it takes.

[MJP]

the BOE will eventually ned to go to 0%

the FED rate is only 0.25% now, why will the money go to USD ?

Perhaps to buy lots of extremely cheap, fire sale liquidated US assets using extremely cheap US Dollars?

From what I read & it does make a little sense I guess in this nonsense world ....... Folks feel it is safer than a mattress or a bank. They feel USA will not declare bankruptcy.

But will they do the same in the UK?

Hmmm . . . I honestly don't know. Remember the UK is still a country with relatively good educational standards, sort of alright infrastructure but definitely a very tightly controlled population. It could look cheap soon.

[Naam]

It is my opinion that I know as much about what is going to happen as the experts. The fact is that I know nothing. Furthermore I refuse to worry about things that I have absolutely no control over. The remainder of my nest egg will remain in the sorry equities that I already own. Either they will go up or they will not. I'll stick around for the long term and take my chances.

we could form a club if the hurdle "investing in equities" did not exist

p.s. please define "long term"

Long term is defined as as long as it takes.

my provocative question was based on the fact that you are just two years younger than me. in my opinion our remaining statistical life span does not warrant expressions like "long term" when it concerns investments

[Gary A]

It is my opinion that I know as much about what is going to happen as the experts. The fact is that I know nothing. Furthermore I refuse to worry about things that I have absolutely no control over. The remainder of my nest egg will remain in the sorry equities that I already own. Either they will go up or they will not. I'll stick around for the long term and take my chances.

we could form a club if the hurdle "investing in equities" did not exist

p.s. please define "long term"

Long term is defined as as long as it takes.

my provocative question was based on the fact that you are just two years younger than me. in my opinion our remaining statistical life span does not warrant expressions like "long term" when it concerns investments

I seriously doubt that I will need any of my nest egg, so long term means that my children will probably have to make the decision. Thus long term means as long as I live. Yes, unfortunately (maybe fortunately) we're no longer young men. Truthfully, if I were a young man, I may be suicidal. I really wouldn't want to have to worry about earning a living again.

[AlexLah]

I think it is very funny you know that people still do not really understand what is going on.

The US now is saying that it will pay you zero interest if you loan them money.

Still people are willing to go with that.

Oh the big American carcompanies have to be saved.

Do you have any idea who is the owner of those big car companies?

A private investment firm.

So American taxpayers are giving money to a private investor, ha ha ha!

And Bernanky or Paulson whoever is in charge will not tell where all those 8.5 Trillion USD has gone.

I tell you, it went to foreign investors, anyone knows Palm Island in Midlle East?

That is where you also can track down some of the Madeoff money.

[flying]

I think it is very funny you know that people still do not really understand what is going on.

Hey your the one with the avatar that reads "The One That Knows" Not Us

The US now is saying that it will pay you zero interest if you loan them money.

Still people are willing to go with that.

Well even though *I* dont know I *think* it is because they believe even if TSHTF US will be last man standing & will not declare bankruptcy. Not that *I* agree

American taxpayers are giving money to a private investor, ha ha ha!

No actually the Guberment does. We the taxpayers have recently detached ourselves from them....Didn't you get the memo?

(flying walks away muttering to himself....."I thought he knew"...his thingy said he knew)

And Bernanky or Paulson whoever is in charge will not tell where all those 8.5 Trillion USD has gone.

Well we *know* this...... neither of them is in charge.The *other guys* are. We know where the $ went same place all the rest went to the *other guys*.

[AlexLah]

Ha ha ha!

You are funny as well.

And to see that one started a thread about when will be the end of this crisis.

Ha ha ha ha, we have just started!!!!!!

Why you wanna stop already, huh?

You wanna miss the big show?

[flying]

And to see that one started a thread about when will be the end of this crisis.

Ha ha ha ha, we have just started!!!!!!

I will agree 100% with that

It is like someone got on a flight from Thailand to USA & 10 minutes into the flight is asking ....Are we there yet?

[MJP]

And to see that one started a thread about when will be the end of this crisis.

Ha ha ha ha, we have just started!!!!!!

I will agree 100% with that

It is like someone got on a flight from Thailand to USA & 10 minutes into the flight is asking ....Are we there yet?

Dad. DAD!!! Are we there yet?

[Crushdepth]

I wish people would spend a bit of energy formatting their posts so that they were actually readable. You're hurting my eyes!

[flying]

And to see that one started a thread about when will be the end of this crisis.

Ha ha ha ha, we have just started!!!!!!

I will agree 100% with that

It is like someone got on a flight from Thailand to USA & 10 minutes into the flight is asking ....Are we there yet?

Dad. DAD!!! Are we there yet?

My daughter who I always told dont ask me that would then say

"Are we Almost there yet then?"

[MJP]

And to see that one started a thread about when will be the end of this crisis.

Ha ha ha ha, we have just started!!!!!!

I will agree 100% with that

It is like someone got on a flight from Thailand to USA & 10 minutes into the flight is asking ....Are we there yet?

Dad. DAD!!! Are we there yet?

:jerk: My daughter who I always told dont ask me that would then say

"Are we Almost there yet then?"

Ahhh . . . that's so sweet!

My four year old tried to stab me.

[AlexLah]

Well stab back the litlle bugger!

[LaoPo]

January 01, 2009

Will Banks and Financial Markets Recover in 2009?

By Nouriel Roubini

NEW YORK - Global financial markets in 2008 experienced their worst crisis since the Great Depression of the 1930's. Major financial institutions went bust; others were bought up on the cheap or survived only after major bailouts. Global stock markets fell by more than 50%; interest-rate spreads skyrocketed; a severe liquidity and credit crunch appeared; and many emerging-market economies staggered to the International Monetary Fund for help.

So what lies ahead in 2009? Is the worst behind us or ahead of us? To answer these questions, we must understand that a vicious circle of economic contraction and worsening financial conditions is underway.

The United States will certainly experience its worst recession in decades, a deep and protracted contraction lasting about 24 months through the end of 2009. Moreover, the entire global economy will contract. There will be recession in the euro zone, the United Kingdom, Continental Europe, Canada, Japan, and the other advanced economies. There is also a risk of a hard landing for emerging-market economies, as trade, financial, and currency links transmit real and financial shocks to them.

In the advanced economies, recession had brought back earlier in 2008 fears of 1970's-style stagflation (a combination of economic stagnation and inflation). But, with aggregate demand falling below growing aggregate supply, slack goods markets will lead to lower inflation as firms' pricing power is restrained. Likewise, rising unemployment will control labor costs and wage growth. These factors, combined with sharply falling commodity prices, will cause inflation in advanced economies to ease toward the 1% level, raising concerns about deflation, not stagflation.

Deflation is dangerous as it leads to a liquidity trap: nominal policy rates cannot fall below zero, so monetary policy becomes ineffective. Falling prices mean that the real cost of capital is high and the real value of nominal debts rise, leading to further declines in consumption and investment - and thus setting in motion a vicious circle in which incomes and jobs are squeezed further, aggravating the fall in demand and prices.

As traditional monetary policy becomes ineffective, other unorthodox policies will continue to be used: policies to bail out investors, financial institutions, and borrowers; massive provision of liquidity to banks in order to ease the credit crunch; and even more radical actions to reduce long-term interest rates on government bonds and narrow the spread between market rates and government bonds.

Today's global crisis was triggered by the collapse of the US housing bubble, but it was not caused by it. America's credit excesses were in residential mortgages, commercial mortgages, credit cards, auto loans, and student loans. There was also excess in the securitized products that converted these debts into toxic financial derivatives; in borrowing by local governments; in financing for leveraged buyouts that should never have occurred; in corporate bonds that will now suffer massive losses in a surge of defaults; in the dangerous and unregulated credit default swap market.

Moreover, these pathologies were not confined to the US. There were housing bubbles in many other countries, fueled by excessive cheap lending that did not reflect underlying risks. There was also a commodity bubble and a private equity and hedge funds bubble. Indeed, we now see the demise of the shadow banking system, the complex of non-bank financial institutions that looked like banks as they borrowed short term and in liquid ways, leveraged a lot, and invested in longer term and illiquid ways.

As a result, the biggest asset and credit bubble in human history is now going bust, with overall credit losses likely to be close to a staggering $2 trillion. Thus, unless governments rapidly recapitalize financial institutions, the credit crunch will become even more severe as losses mount faster than recapitalization and banks are forced to contract credit and lending.

Equity prices and other risky assets have fallen sharply from their peaks of late 2007, but there are still significant downside risks. An emerging consensus suggests that the prices of many risky assets - including equities - have fallen so much that we are at the bottom and a rapid recovery will occur.

But the worst is still ahead of us. In the next few months, the macroeconomic news and earnings/profits reports from around the world will be much worse than expected, putting further downward pressure on prices of risky assets, because equity analysts are still deluding themselves that the economic contraction will be mild and short.

While the risk of a total systemic financial meltdown has been reduced by the actions of the G-7 and other economies to backstop their financial systems, severe vulnerabilities remain. The credit crunch will get worse; deleveraging will continue, as hedge funds and other leveraged players are forced to sell assets into illiquid and distressed markets, thus causing more price falls and driving more insolvent financial institutions out of business. A few emerging-market economies will certainly enter a full-blown financial crisis.

So 2009 will be a painful year of global recession and further financial stresses, losses, and bankruptcies. Only aggressive, coordinated, and effective policy actions by advanced and emerging-market countries can ensure that the global economy recovers in 2010, rather than entering a more protracted period of economic stagnation.

Nouriel Roubini is Professor of Economics at the Stern School of Business, New York University and Chairman of RGE Monitor (www.rgemonitor.com), an economic and financial consultancy.

-RealClearPolitics.com

LaoPo

[flying]

But the worst is still ahead of us.

[LaoPo]

The worst is still ahead

The entire global economy will contract in a severe and protracted U-shaped global recession that started a year ago - Roubini.

Nouriel Roubini

08 January 2009 16:06

The global financial system in 2008 experienced its worst crisis since the Great Depression of the 1930s. Major financial institutions went bust. Others were bought up on the cheap or survived only after major bailouts. Global stock markets fell by more than 50 percent from their 2007 peaks. Interest-rate spreads spiked. A severe liquidity and credit crunch appeared. Many emerging-market economies on the verge of a crisis had to ask for help from the International Monetary Fund.

The global financial system literally went into a cardiac arrest after the Lehman Brothers Holdings Inc. collapse and a meltdown was barely avoided through very aggressive policy responses. So what lies ahead in 2009? Is the worst behind us or ahead of us?

Unfortunately, the worst is ahead of us. The entire global economy will contract in a severe and protracted U-shaped global recession that started a year ago. The U.S. will certainly experience its worst recession in decades, a deep and protracted contraction lasting at least through the end of 2009. Even in 2010 the economic recovery may be so weak -- 1 percent growth or so -- that it will feel terrible even if the recession is technically over.

Recession spreads

There also will be recessions in the euro zone, the U.K., continental Europe, Canada, Japan and the other advanced economies.

A hard landing for emerging-market economies may also be at hand. Among the so-called BRICs, Russia will be in an outright recession in 2009. Growth in China will slow to 5 percent or less, representing a hard landing for a country that needs expansion of close to 10 percent to move 10 million to 15 million poor rural farmers into the urban industrial sector every year. Brazil will barely grow in 2009. Even India will experience a sharp slowdown.

Most other emerging market economies will suffer a similar hard landing. This severe global recession will morph into a stag-deflation, a deadly combination of economic stagnation/recession and deflation. In the advanced economies, with aggregate demand falling below growing aggregate supply, slack in goods markets will lead to deflationary pressures as companies' pricing power is restrained.

Likewise, rising unemployment will constrain labor costs and wage growth. These factors, combined with sharply falling commodity prices, will cause inflation in advanced economies to ease toward negative territory, raising concerns about deflation.

Danger of deflation

Deflation is dangerous as it leads to a liquidity trap: nominal policy rates can't fall below zero, so monetary policy becomes ineffective and even quantitative easing may not work.

Falling prices mean that the real cost of capital is high and the real value of nominal debts rise. This leads to further declines in consumption and investment, thus setting in motion a vicious circle in which incomes and jobs are squeezed, aggravating the fall in demand and prices.

As traditional monetary policy becomes ineffective, other unorthodox policies will continue to be used: policies to bail out investors, financial institutions, and borrowers; massive provision of liquidity to banks in order to ease the credit crunch; and even more radical actions to reduce long-term interest rates on government bonds and narrow the spread between market rates and government bonds.

Triggering event

Today's global crisis was triggered by the collapse of the U.S. housing bubble, but it wasn't caused only by it. America's credit excesses were in residential mortgages, commercial mortgages, credit cards, auto loans and student loans.

There were also massive excesses in the securitized products that converted these debts into toxic financial derivatives; in borrowing by local governments; in financing for leveraged buyouts that should never have occurred; in corporate bonds that will suffer massive losses as defaults surge; in the dangerous and unregulated credit default swap market.

Moreover, these pathologies weren't confined to the U.S. There were housing bubbles in many other countries, fueled by excessive and cheap lending that didn't reflect underlying risks. There was a commodities bubble and private-equity and hedge-funds bubbles.

Shadow Banks

We now are seeing the demise of the shadow banking system, the complex of non-bank financial institutions that looked like banks as they borrowed short term and in liquid ways, leveraged a lot, and invested in longer term and illiquid ways. As a result, the biggest asset and credit bubble in financial history is going bust, with overall credit losses likely to be more than $2 trillion.

Unless governments rapidly recapitalize financial institutions, the credit crunch will become even more severe as losses mount faster than recapitalization and banks are forced to constrain credit and lending. Equity prices and other risky assets have plunged from their peaks of late 2007, but there are still significant risks for more declines.

An emerging consensus argues that the prices of many risky assets -- including equities -- have fallen so much that we are at the bottom and a rapid recovery will occur. But in the next few months the macroeconomic news, the earnings and profits reports, and the financial sector news from around the world will be worse than expected. This will put more pressure on prices of risky assets, with a chance of a 20 percent fall in global equity prices.

Meltdown averted

While the odds of a systemic financial meltdown have been reduced by the actions of the Group of Seven and other economies, severe vulnerabilities remain.

The credit crunch will persist and spread beyond mortgages. Deleveraging will continue, as thousands of hedge funds -- many of which will go bust -- and other leveraged players are forced to sell assets into illiquid and distressed markets, thus causing price declines and driving more insolvent financial institutions out of business. Credit losses will mount as the recession deepens. And a few emerging-market economies will certainly enter a full-blown financial crisis.

So 2009 will be a painful year of global recession and further financial stresses, losses and bankruptcies. Currently, the probability of an L-shaped, stag-deflation is now rising to a third, while the probability of a severe U-shaped recession is two-thirds. Only aggressive, coordinated and effective policy actions by advanced and emerging-market countries can ensure that the global economy starts to recover -- however slowly --in 2010, rather than entering a more protracted period of economic stagnation.

As Chairman of RGE Monitor, Nouriel Roubini provides strategic guidance for RGE Monitor's business and content. Professor Nouriel Roubini is an internationally known expert in the field of international macroeconomics. He is a Professor of Economics at New York University's Stern School of Business and is also the co-founder and Chairman of RGE Monitor, an innovative economic and geo-strategic information service named one of the best economics websites by BusinessWeek, Forbes, the Wall Street Journal and The Economist. Two years ago, Professor Roubini predicted the current economic crisis.

-Moneyweb

LaoPo

[pkrv]

Unless governments rapidly recapitalize financial institutions, the credit crunch will become even more severe as losses mount faster than recapitalization and banks are forced to constrain credit and lending. LaoPo

IMO - Wrong -credit worthy people/etc are not borrowing - that is the problem - there is an infinite amount of money to lend (or was)

[LaoPo]

Nouriel Roubini raises growth forecasts for Asia

By Sameera Anand | 29 July 2009

China and India will lead growth in Asia, but the recovery in the region will be U-shaped, says Roubini's RGE Monitor.

RGE Monitor, the firm founded by economist Nouriel Roubini, yesterday raised its growth forecasts for Asia, including China and India. The change is based on an improvement in global conditions in the second quarter of 2009, aggressive policy responses by governments and the fact that manufacturing activity in several countries has bottomed out. Inventory re-stocking, stimulus measures and global risk appetite will also temporarily boost Asia's growth, RGE said.

However, RGE continues to believe global growth will contract until late 2009 or early 2010. Its forecast is that global growth will contract by 1.9% in 2009 and that economic growth in the United States, the European Union and Japan (the G-3) will be sluggish. RGE believes a complete recovery in Asia is dependent on the timing and pace of the G-3 recovery, hence Asia's growth will remain under pressure for the rest of this year.

"Deleveraging in the US and [the] EU and a slow revival of the global electronics cycle will lead to a U-shaped recovery in Asia," said RGE. The New York-based economic news and analysis firm added that structural reforms to boost domestic demand in Asia will need several years to take effect so a sustained recovery in Asia in the short term is dependent on the US recovery. "However, better macro and financial fundamentals relative to other emerging markets will be a plus for Asian economies and asset markets during the recovery," added RGE.

Asia ex-Japan will grow by 4.3% in 2009, led by China and India, and will revive further and grow by 6.2% in 2010, the firm said.

RGE expects China to grow around 7.5% in 2009 with the fiscal stimulus being a key driver. However, RGE does not expect China's infrastructure spending to boost manufacturing in the rest of Asia. It cautioned that "China will need to start tightening carefully in 2009 given overheating in equity and property markets" and added that China also has limited ability to diversify from US assets.

In India, domestic consumption will ensure growth of around 5.7%. But RGE highlighted that Indian companies will have difficulty accessing external capital which has been the main driver of investment in recent years and also suggested that investors into India are overly optimistic about government reforms.

Further, slower exports and the dependence of both China and India on foreign capital will keep growth in these two economies below full potential, even in 2010.

RGE predicted that a couple of the other "Asian Tigers" -- Malaysia and Thailand -- will contract in 2009 with a sluggish recovery in 2010, on account of pressure on exports and reduced domestic demand. Growth in the Philippines, Indonesia and Vietnam will also slow due to export contraction and commodity correction.

Roubini is a professor at New York University's Stern Business School and a former adviser to the US Treasury and the International Monetary Fund. He was one of the few economists to correctly predict the scale of the recent financial crisis.

http://www.financeasia.com/article.aspx?CIaNID=108736

LaoPo

[zzaa09]

Unless governments rapidly recapitalize financial institutions, the credit crunch will become even more severe as losses mount faster than recapitalization and banks are forced to constrain credit and lending. LaoPo

IMO - Wrong -credit worthy people/etc are not borrowing - that is the problem - there is an infinite amount of money to lend (or was)

That's the real problem. Most think there is money.......so where is this wealth? It's all make-believe and illusion.

Edited July 28, 2009 by zzaa09