Economic "Doom" Mega thread

Varmint

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I wonder if this is the bottom? Today's presidential press conference seems promising.
2350 has been very strong support, tested several times this week. We might have a short term bottom here, that's how bear markets work, you have periodic huge rallies that appear to be bottoms and suck in lots of buyers.

but the close today didn't look good.
 

Varmint

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Or, you know, we have actual qualified public servants and central bankers who know (for the most part) what they're actually doing.
The central bank is run by very smart people, but they're all academics, who rely completely on their academic modeling of the economy. That's why they go off the rails when we get into extreme situations like this, when their model can't account for what's going on.

What is "real inflation", exactly?
Real inflation is basically how much your cost of living goes up every year. Most would peg that at like 5-6%.

The official inflation number is one provided by the Fed, and kept artificially low by all kinds of doctoring of the way it measures inflation. The Fed's doctored inflation numbers have car prices going down every year, for example - by saying that you get more standard features so it counts that as negative price increases. The Fed count free blogs as magazines, so they can claim that magazine prices don't go up. The official inflation number is full of this kind of phony measurements.

The Fed then uses this phony number to measure GDP - our official GDP number is real GDP growth (say 4%) minus the phony inflation number (1.5%) = 2.5%.

Why does the Fed fake the inflation number? Cause it's used to determine the rate at which the Federal Government borrows money. They need that to be close to 0% or else the interest on our $20 trillion in national debt would be too high.
 

Varmint

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Market is trying very hard to form a bottom at 2350. If there's any slowdown in the virus outside China, stocks will go ballistic. That'll be the time to sell.
 

Varmint

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If you think about all the 401k plans in the whole country, everyone combined contributes about $200 billion a year. Until recently, the Fed was printing that much in just 2 and a half months, and most of that money went right into the stock & bond markets. Then there's the 0% interest rates which let big corporations replace all their debt with 0% interest, and also invest money borrowed at 0%.

So yeah, if the Fed weren't printing trillions out of thin air, and promising (wink-wink) to resume the printing at the first sign of a market crash, we'd be deep in a depression.
Bumping my post from 2014, it's strangely relevant today. [laugh]
 
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Jumping back on this thread. Been watching the markets closely - actually trading a bit - mostly SPY puts. One thing I noticed yesterday was 350,000 TWENTY STRIKE June 20 puts yesterday. TWENTY STRIKE! For .07. Early next week will suck, too, with the unemployment numbers, per Goldman, ramping to close to 3MM. I do believe SPY will break $200 shortly.

One other thing, read the tea leaves on Ray Dalio's CNBC interview. Effectively, eventually, cash will likely not be safe (read; hyperinflation). And, not surprisingly, which was reported before the market closed yesterday, we had our first 10x leveraged douche bag Hedge Fund go under. More to follow.
 
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Varmint

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Jumping back on this thread. Been watching the markets closely - actually trading a bit - mostly SPY puts. One thing I noticed yesterday was 350,000 TWENTY STRIKE June 20 puts yesterday. TWENTY STRIKE! For .07. Early next week will suck, too, with the unemployment numbers, per Goldman, ramping to close to 3MM. I do believe SPY will break $200 shortly.

One other thing, read the tea leaves on Ray Dalio's CNBC interview. Effectively, eventually, cash will likely not be safe (read; hyperinflation). And, not surprisingly, which was reported before the market closed yesterday, we had our first 10x leveraged douche bag Hedge Fund go under. More to follow.
You mean the SPY price is $20 on the option? Do they do that in hopes of selling the option as SPY goes down? Like a more realistic crash might be to 100 on SPY, could they then sell these options for good money?
 

Varmint

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One other thing, read the tea leaves on Ray Dalio's CNBC interview. Effectively, eventually, cash will likely not be safe (read; hyperinflation). And, not surprisingly, which was reported before the market closed yesterday, we had our first 10x leveraged douche bag Hedge Fund go under. More to follow.
I like Dalio, he completely owned up to missing this crash, and not knowing how to trade it. Very refreshing.
 

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Germany's largest PM shop closes, will close for 3 days to public. Will reopen Thurs with "very limited" range of products.


Maybe this is just related to the virus and unusually high demand, as they claim.

Or maybe the government wants to keep gold out of the hands of private citizens. The odds of currency reset just went up a little.
 

Yazz

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Varmint

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FEMA gonna shut us down?
We're 2/3rd of the way there already. Now playgrounds are off limits in my town.

I stocked up on cat food, the little furball gets real annoying when he's hungry.
 

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Rand Paul, Mike Lee and a couple others are trying to stop the stupidity. Like if we are going to spend $1T, maybe find a way to pay for it and don’t build socialist give away programs that don’t go away - ever into these bills.
Would that be the same Mike Lee trying to increase the number of green cards to India?
 
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I don't know what the expected deficit was supposed to be this year but I feel safe in saying we will add another $3T in debt on top of that.
We doubled the debt under Obama and no one said a word. This is an actual event that would actually justify some debt in my opinion. This is the national equivalent of losing your job suddenly. You are going to incur some debt if you aren't ready for it.

Defaulting on our debt to our biggest foreign holder of debt will make the economic impact of the Coronavirus seem mild in comparison.
I'm wondering what happened to Iceland? or whatever country defaulted a while ago? Did the country implode? I don't think so. Yes, it was a backwater country, but at some point we all agree this house of cards

Oh by all means please tell us why.
My understanding is there simply isn't enough physical gold to cover the US economy. I've been wrong before, could be wrong now, but that's my understanding of it. The best course I've heard is a basket of hard assets, oil/lumber/gold/silver, that could be used in a similar vein.

Most people will piss away that 1k in a few days. Retail will get a very brief spike and then it's over.

More prudent would be making interest free loans to small business to float them thru until this is over. Most taxpayers dont need a thousand dollars.
Like it or not, most people live paycheck to paycheck. Without cash in their pocket, things will get ugly fast.

I almost bought Enron when it was 4 cents.
You could have retired on a $100 investment if it turned around though.
 

Varmint

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FWIW, I was told first hand that the bank run is ramping quickly and some branches will unable to meet their customers cash demands today.
Traditionally a bank run was when people want all their cash out of the bank - I think this is more of, everybody wants to withdraw some cash at the same time, and banks just don't stock much cash.

It's not like the bank is going belly up, just they don't have much paper cash.
 
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FWIW, I was told first hand that the bank run is ramping quickly and some branches will unable to meet their customers cash demands today.
A bank run is when customers think a bank might be shaky, and so they withdraw their money from the bank. As other customers do the same, the bank -- which may have been healthy the whole time -- runs out of money.
 

GM-GUY

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Would that be the same Mike Lee trying to increase the number of green cards to India?
He’s not perfect to be sure, but he’s not trying to remove the border between the US and the rest of the world either. After this is over, I hope that it will spur some real USA moves, not just speeches. We should be able to make critical stuff here, and some real screenings at airports.

BANK RUN
Debit cards are fine (crazy that there is no protection) but work. Until a Bank Holiday happens and NONE of that fancy plastic works.
 
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I'm wondering what happened to Iceland? or whatever country defaulted a while ago? Did the country implode? I don't think so. Yes, it was a backwater country, but at some point we all agree this house of cards
Iceland didn't default on its sovereign debt, but some of its banks defaulted on their own debts.

A list of countries who have defaulted on their sovereign debt includes Russia (the first nuclear power to do so), Argentina (several times!), Zimbabwe, Argentina, and Venezuela. I think you will agree that this is economic company we don't want to keep...
 
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Iceland didn't default on its sovereign debt, but some of its banks defaulted on their own debts.

A list of countries who have defaulted on their sovereign debt includes Russia (the first nuclear power to do so), Argentina (several times!), Zimbabwe, Argentina, and Venezuela. I think you will agree that this is economic company we don't want to keep...
Semantics aside, aren't we already there in practice? If not in actuality? The only thing that makes our money worth anything is the fact that other countries are worse off than we are? Or the belief that it has some 'value' at least?
 
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The next 24 hours will be pivotal for the market. The 4T stimulus will be announced (soon) and I'm anticipating a spike over (SPY) 235, perhaps even to 242, then shorted back under 200, within days.
 
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That's what I don't get, the last market crash was due mainly to one or two segments of our economy, mainly lending.

This is a production issue. Every segment of our economy is being hit with this. From the big companies down to the single guy handy man working out of his truck. China is shut down, we are shut down. Nothing is being produced in the grand scheme of things. I don't know how you could possibly stop this meltdown by just throwing money at it unless the government was just flat out buying stock a la GM when it went down. How many of the small companies are done, not coming back?
 

xtry51

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We (USA) live in a service centric economy. A lot of these people have lost their jobs. The restaurant my daughter works at in St Louis closed completely and laid all their staff off. Millions of people no longer have jobs and we're facing another 6-18 months of this situation.
 
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Semantics aside, aren't we already there in practice? If not in actuality? The only thing that makes our money worth anything is the fact that other countries are worse off than we are? Or the belief that it has some 'value' at least?
The thing that makes our money worth something is that we have never defaulted on our debts, we have the biggest economy, and we have probably the most open economy. That all goes away if we default on our debts.
That's what I don't get, the last market crash was due mainly to one or two segments of our economy, mainly lending.
The market crash was due to lending, but that lending had been securitized over and over that it pervaded almost every aspect of the financial system. The rise of (largely unregulated) derivatives meant that debts that should have failed with relatively little consequences actually had massive, ruin-the-economy consequences.
 

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The feared DEATH CROSS has appeared!!!
A bearish ‘death cross’ has appeared in the Dow’s chart
 

Varmint

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That's what I don't get, the last market crash was due mainly to one or two segments of our economy, mainly lending.

This is a production issue. Every segment of our economy is being hit with this. From the big companies down to the single guy handy man working out of his truck. China is shut down, we are shut down. Nothing is being produced in the grand scheme of things. I don't know how you could possibly stop this meltdown by just throwing money at it unless the government was just flat out buying stock a la GM when it went down. How many of the small companies are done, not coming back?
It's not just a production, or GDP issue, it's also a debt issue. For 10 years the global central banks pumped out so many trillions in 0% loans, plus the 10s of trillions in sovereign debt, and those bonds are now at risk, which could bring down the whole financial system. A bond market collapse is a much worse scenario than a stock market crash cause it's a much bigger market, and has been inflating for 30 years.
 
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