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US: Truth behing default comedy
  • Vitaliy_KiselevVitaliy_Kiselev
    As you can see markets ignored all this "last minute deal" stuff and continue going down.

    Why we see downfall in times then stock market is controlled by major players and US goverment?

    US has two main targets (as well as major other players - Japan, EU):

    1) Keep rates low. And look how they manage to cut them in last two weeks:
    2 Year 0.28%
    5 Year 1.17%
    10 Year 2.51%
    30 Year 3.79%

    image

    Why? Simple. You have exponentially rising debt, so to keep payments you need to decrease rates.

    image
    This chart is not current, but main idea is pretty clear. It had been used for long.

    It also explains that real threat is not China.
    Real thread is rising rates as double rates mean hundreds of billions new payments.

    2) You need basis for QE3. Yes, I mean spending 1-2 trillions in quite short time.
    All this talks how they'll save money other next 10 years are all good (as they'll save them on social programs and some real stuff).
    But good guys (read banks and insurance) need to live.
  • 28 Replies sorted by
  • LPowellLPowell

    Gold

    http://www.kitco.com/LFgif/au0030lnb.gif
    au0030lnb.gif
    450 x 275 - 7K
  • Vitaliy_KiselevVitaliy_Kiselev
    image
  • LPowellLPowell
    Yes, at 11:00 on Aug 4, the players sold off their stashes at the peak in order to cover their short-term debts. The speculators took note at 12:45 and bought in to take advantage of the dip, then took a quick profit at 13:30, provoking the secondary dip at 13:45...
  • EOSHDEOSHD
    When gold reserves start to be sold off, then the real shit hits the fan.

    Maybe anamorphic lenses would be a more stable commodity at a time like this ;)
  • Vitaliy_KiselevVitaliy_Kiselev
    >When gold reserves start to be sold off, then the real shit hits the fan

    Many guys think that no such thing as gold reserves exist in US :-)

    >Maybe anamorphic lenses would be a more stable commodity at a time like this ;)

    Yeah, stable. One lens - one peace of bread. :-)
  • Vitaliy_KiselevVitaliy_Kiselev
    @LPowell

    I am for other theory explaining this.
    Margin calls cause necessity to get money fast. Hence gold sales.
  • svartsvart
    This is why I don't play the stock markets. It's just legalized gambling. Most lose, a few make big money, some gain a little bit and get greedy and keep trying while losing money in the hopes to get a big payday(usually with other people's money).
  • Vitaliy_KiselevVitaliy_Kiselev
    Bank of New York Mellon Corp said it is being overwhelmed with deposits from investors fleeing risky markets, and said it will begin charging for above-average deposits.

    Via: http://www.reuters.com/article/2011/08/04/us-usa-banks-bny-idUSTRE7735JW20110804
  • Vitaliy_KiselevVitaliy_Kiselev
    >It's just legalized gambling

    It is not.
    This is common myth very popular amongst many people.
  • EOSHDEOSHD
    So basically all the money that was invested by the rich in Greece and Ireland is now sitting in a New York bank that doesn't want it?

    I would love to see how these investors fight off a charging gang of post apocalyptic wildcats with bank notes. I hope they keep some guns handy as well as just stacks of cash.
  • LPowellLPowell
    @Vitaliy_Kiselev "Margin calls cause necessity to get money fast. Hence gold sales. "

    Yes, that's exactly why the players sold off their stashes.
  • EOSHDEOSHD
    Again a system held hostage to individualism. No investor thinks about stability of overall world, he only looks after his own stash.
  • Vitaliy_KiselevVitaliy_Kiselev
    >No investor thinks about stability of overall world, he only looks after his own stash.

    Yeah, it is normal behaviour of every animal, including people :-)
    Nothing special about investors here.
  • EOSHDEOSHD
    True, but some kind of forced altruism would fix the system. As it is, its demise is inevitable, so to continue patching it up to starve off the inevitable cataclysmic collapse is proving very costly, probably more costly than just letting the whole thing die to be honest.

    Meanwhile in London:

    "My colleague Jill Treanor has calculated that taxpayers are now nursing £28bn of losses on their £65bn stakes in Lloyds and RBS."

    There's an example of where patching things up in the last meltdown has come back to haunt us. We should have let the banks die and for the system to self correct back to a more natural state. What the bailouts did was to perpetuate the current fiction and reset the cycle of doom.

    Square this picture with the Government's official PR line today by the Chancellor:

    "This is a time of uncertainty in the international economy. Because of our difficult decisions to reduce the deficit and tackle our debts, Britain has been stable during this time.

    The economy is growing and creating jobs."

    Hmm!
  • MihuelMihuel
    We live in very interesting times. Economic and political system is on the brink of a precipice, but I'm not even sure if anything will change a huge crisis. Is the crisis of the 20s of the twentieth century, much has changed in the political systems of countries affected by it? I think that once you are a horrible little man with a mustache and start a big war turmoil? I am opposed to communist ideology, but probably only something like this could scare enough Western politicians depend on global finance, to change anything.
    The old Chinese proverb says:
    "If you itchy ass in the evening it is possible that in the morning you will stink finger" ;-)
  • brianlucebrianluce
    >>>>>>It's just legalized gambling

    Not a great analogy. In gambling there's a house, in the stock market I suppose there's a house, but you're the house if you're shareholder. And the house often wins, Over the last 100 or so years the stock market has proven to be one of the safest and best places to invest -- out performing most other investment types. You just can't look at a day like today, or even the year and make any worthwhile conclusions. If you're in the market for the long term, most likely you'll come out ahead.
  • EOSHDEOSHD
    It is certainly more strategic than gambling, I think what he meant with the analogy is that they both have an element of risk and money. And numbers that flash with lights :)
  • Vitaliy_KiselevVitaliy_Kiselev
    @EOSHD

    Life also has element of risk and money.
  • EOSHDEOSHD
    Well the banks have got the risk and money wrong. The system meant they were too important to be allowed to fail. So the debt burdens shifted to governments and tax payers. This second economic meltdown is the result of those decisions made in 2007/2008 during the first one. They delayed the inevitable. This time it will be a lot worse.

    What is a shame in all of this, is that in places like Greece there are a lot of highly qualified, hungry and talented young people who are the only ones capable of rebuilding the economy, exporting their skills and yet they are now working in McDonalds.

    Those are the social consequences no banker ever thinks about when he plays with risk and money.

    It seems simple to me... a bailout doesn't actually solve anything, it just shifts the problem to the country or institution doing the bailout. We put all our water in a bucket with a hole in it, without plugging the hole, and now we are surprised when we have to put yet more water in to fill the bucket. Eventually it will be dry.
  • Vitaliy_KiselevVitaliy_Kiselev
    >This second economic meltdown is the result of those decisions made in 2007/2008 during the first one.

    No way.

    >They delayed the inevitable.

    Don't find anything wrong with "delaying the inevitable".
    Most of the people are doing same thing whole their life.

    >in places like Greece there are a lot of highly qualified, hungry and talented young people who are the only ones capable of rebuilding the economy

    Are you sure?
  • EOSHDEOSHD
    I am pretty sure. The false economy has a gun to the head of the real one. People are talking and speculating themselves into major problems that have no real foundation in the fundamental economy. In the world of fantasy economics if you believe something to be true, eventually it has a habit of coming true.
  • Vitaliy_KiselevVitaliy_Kiselev
    >The false economy has a gun to the head of the real one.

    Nope.
    Virtual economy is the only approach that allows to survive and compete for many countries.
    Look at the patents and copyright. This is same virtual fairy tales bullshit. But countries got billions and prevent others from making trillions.
  • EOSHDEOSHD
    Patents and copyright are certainly 90% ridiculous and political.

    If the Euro collapses how do you see the UK's situation Vitaliy? Save haven or buggered?
  • Vitaliy_KiselevVitaliy_Kiselev
    >If the Euro collapses how do you see the UK's situation Vitaliy?

    UK economics are in much worse state comparing to Germany adn France.
    Debt situations is also serious (but UK ans US are controlling massmedia, so average Joe do not know it well).
  • EOSHDEOSHD
    I think the mass media are actually fanning the flames rather than people being naive to the problems. The mass media of the West is part of the economic problem. The UK and US have no control over that.
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