RE: [RT] Fw: Q Ratio Signals Horrific Market Bottom, RealTraders Email List Archive

** What happens when no one can buy or refuses to buy treasures?**

That would be the great collapse. Wasn’t there a similar problem proximate to the 1987 crash that was caused by foreign exchange issues? The only thing that stalls the current day of reckoning is the belief that the US will not monetize the debt as has every country in Europe. When that happens, and I expect it will, would it be possible to default on international obligations (Treasuries owned by China, etc) but support obligations to……Social Security? The ultimate ‘preferential payment’ in bankruptcy!!!!

** The only other answer is the emergence of new technology**

Well, Greenspan DECLARED back in ‘98 or so that ‘The Information Age has created an environment in which ever increasing gains in productivity will support an ever expanding equity market.” And Bill Clinton leveraged on that statement shortly thereafter saying “We have conquered the business cycle in our lifetime.” (Paraphrased very imperfectly from recollection.) Incredible hubris even for them.

Jim

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Jim White
Sent: Wednesday, December 10, 2008 2:24 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] Fw: Q Ratio Signals Horrific Market Bottom

Gene,

Your fears are well founded. What happens when no one can buy or refuses to buy treasures?

The only real answer is to increase production of real assets. The conversion of human energy to real goods is the only way to add real money to the system. Unfortunately the demographics in the US and Europe do not support an increase in consumption until about 2015. So the wages provided by the public works projects being proposed are not sufficient to pull us out of the dilemma unless they are much larger and longer than currently thought. The only other answer is the emergence of new technology - perhaps nanotech or energy conversion. That could stimulate another production bubble sufficient to bail us out.

Another potential remedy is a massive immigration of young consumer oriented individuals. Perhaps we can provide incentives to import millions of young people from China and India, putting them to work building energy and housing infrastructure and building cars in Detroit.

Jim

----- Original Message -----

From: Gene Pope

To: realtraders@xxxxxxxxxxxxxxx

Sent: Wednesday, December 10, 2008 10:44 AM

Subject: RE: [RT] Fw: Q Ratio Signals Horrific Market Bottom

I have to say that this amazing confluence of negativity strikes me as one of either two things: A) Sobering, or B) An internet-age substitute for the “End is Near” walking signs that showed up in so many cartoons when I was a kid.

FWIW, here is none other than Taleb (Black Swan) and Mandelbrot (no intro necessary) on Jim Lehrer Newshour this October:

http://www.pbs.org/newshour/video/module.html?mod=0&pkg=21102008&seg=5

If you really want to get jumpy, here’s Peter Schiff, who predicted the current conditions 2 years ago, and was summarily dismissed and ridiculed then… not any more. His interview begins 1 minute and 50 seconds into this video:

http://www.cnbc.com/id/15840232?video=935047784&play=1

When we contemplate what could actually cause such a collapse, I have a theory. It’s not pretty. I can’t help wondering if we’re entering one final “bubble”, and that is a Treasury bubble. The world is busy snapping up newly issued (and pre-issued) Treasuries like potato chips. It doesn’t really matter what the interest rate is, it’s still a loan. As the world “overshoots” into Treasuries, I still cannot quite get my hands around the notion of how all this is going to get paid off. I’m aware that our national debt to GDP ratio reached something like 20% in the Great Depression, but that was partially (or even mostly) funding the war effort. There is no such cause to focus on today.

It’s also of note that most of the historically large bank crashes were caused by…. surprise… over-leverage and real estate bubbles. But this confluence of government ponzi schemes, global recession, and extreme national debt. It makes me nervous.

Regards,

Gene

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Jim White
Sent: Wednesday, December 10, 2008 11:19 AM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] Fw: Q Ratio Signals Horrific Market Bottom

Before the trough in 2014, investors are likely to see a so- called bear
> market rally for the next two years as central bank actions delay the
> onset of deflation, Napier said.

This agrees with Harry Dent's projection of a high in mid to late 2009 before the plunge. Armstrong calls for March 2009 for a high.

Jim

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