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Old 04-19-2010, 12:04 PM   #21
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True, and maybe I over-reacted to your post.
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Sorry about the ranting tone of these posts. IndependentlyPoor is just in a grouchy mood today.
Thanks for the honesty.

A couple of points:
- There is no one cause to the housing bubble - it is an enviorment
- It takes time for things to go bad
- Gov't and industry had a hand in it
- Look at the programs started in the 30s - Fannie Mae 1938 created the secondary mortgage market prior to that banks kept the mortgages they knew to whom they were lending also mortgages were usually 5 years. The gov't allowed/started 30yr mortgages. There were other government policies/laws that came after that also contributed.
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Data From Wm Hester About The Election Cycle
Old 04-19-2010, 12:11 PM   #22
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Data From Wm Hester About The Election Cycle

Hussman Funds: Business Cycles, Election Cycles and Potential Risks

Clearly there is not enough data to be sure of anything, but I still prefer it to pure assertions. (Pure guesses.)

Readers might wish to skip down about 2/3 toward bottom of the piece under the heading Declines In Year 2 Often Precede Year 3 Gains.

Ha
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Old 04-19-2010, 02:24 PM   #23
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Originally Posted by haha View Post
Hussman Funds: Business Cycles, Election Cycles and Potential Risks

Clearly there is not enough data to be sure of anything, but I still prefer it to pure assertions. (Pure guesses.)

Readers might wish to skip down about 2/3 toward bottom of the piece under the heading Declines In Year 2 Often Precede Year 3 Gains.

Ha
Jeremy Grantham has written a number of times on the presidential cycle. Year 2, of course, is down more often than any other.

If interested see his letters of 4Q 2002 and 4Q 2003 https://www.gmo.com/America/Library/Letters/ (registration required)
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Old 04-19-2010, 06:19 PM   #24
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Originally Posted by haha View Post
Hussman Funds: Business Cycles, Election Cycles and Potential Risks

Clearly there is not enough data to be sure of anything, but I still prefer it to pure assertions. (Pure guesses.)

Readers might wish to skip down about 2/3 toward bottom of the piece under the heading Declines In Year 2 Often Precede Year 3 Gains.

Ha
OK,
So we have on the sell side:
- More Swap bombs out there
- The 2nd year presidential cycle
- T Theory August 28 top
- The question - How much further upside is there and is it worth the risk?
- Cycle theory - we are in a secular bear trend since 2000 but in a cyclical bull since March 2009
- Cycle theory: - I don't put much emphasis on this but it is interesting to see if it happens
Decision Point®: Chart Spotlight 2/27/2009
Hi Carl,
I really enjoy your service and have for about nine years. Thank you for all your hard work and dedication. I was wondering if you could tell me the potential technical "bottom" numbers for the Dow, S&P 500, and Nasdaq?
Thank you very much.

ANSWER: I don't follow the Nasdaq. I have rough targets of Dow 3000 and SPX 300 around late-2010. I wouldn't exactly call these "technical" targets -- I am guestimating a total decline of about 80%, using the 1929-1932 bear market 90% decline as a guide. The timing is based on the estimate for the next 4-Year Cycle low, which is due mid-to-late 2010.
While I can't swear by these estimates, I don't think I'm sticking my neck out too far.
Carl
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Old 04-19-2010, 09:33 PM   #25
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I wasn't around in 2007. Did the ER posting show concern about the market peaking?
Nah, lot's of threads about how milestones were being reached and how we were all going to retire early with so much cash we wouldn't know what to do with it!

In all seriousness...most people don't see peaks until after they have happened. I've found when I spend time being gleeful about my gains the bull run end is near, and fearful of my losses the turnaround is near.

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Old 04-19-2010, 09:58 PM   #26
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DON'T FORGET!

August 10. 2010 Bradley Turn Date that indicates we are going down! (The March 1 2010 turn date certainly had us going up!)

Audrey
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Old 04-19-2010, 10:22 PM   #27
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...Consider this view:
- Banking chaos reigned during the last part of the 19th century with frequent bank runs and panics, culminating in the 1929 crash.
- Federal regulation exemplified by the Glass-Steagall Act and the FDIC ushered in a 50-year period of calm.
- A belief that regulation was strangling growth led to deregulation, starting with the S&L deregulation and continuing through to the creation of the Enron loophole, the repeal of Glass Steagall with the Gramm,Leach,Bliley act, and pehaps the worst of a bad lot, the SEC's relaxation of the Net Capital Rule, that allowed Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley to operate with unlimited leverage.

Little or no regulation: chaos, bank runs, and financial panics
Strong regulation: 50 years of orderly prosperity
Deregulation: chaos, bank runs, and financial panics
Thanks, IP. A succinct summary. I watched these atrocities come with great anxiety and the crash was no surprise. It is incredible how our masters (not to dignify them as 'leaders') forgot the lessons learned following the Crash of '29.

I am interested in Sen. Blanche Lincoln's (D-Ark.) proposed regulatory bill.
Blanche Lincoln Wall Street bill tacks left - John Bresnahan and Carrie Budoff Brown - POLITICO.com

Hang 'em high, Blanche!

Ed
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Old 04-19-2010, 11:31 PM   #28
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As to the OP's article - too long, didn't read the last half. But it seems to me these municipalities are saying, after the fact, "we lost money on these craaazy derivatives, therefore they are unfair". Ex ante, these derivatives were good calculated bets for these municipalities which is why they bought them (or these municipalities waste money on employees who are incompetent). Ex post, things didn't work out well, so now they cry fraud. But if ex post, they would have made millions of dollars or euros from these swaps and derivatives, they would be doing nothing but singing praises of the investment banks for helping shepherd them through these difficult economic times.
That was a long article even for somebody like myself interested in the subject.

I have a modest proposal. Since for the most part this debt between government and too big too fail banks I say cancel the 1/2 the debt, since it isn't in anyone interest to have huge number of municipalities in Europe go into virtual bankruptcy. Thus once again the taxpayer and future generations get stuck with the bill.

However, we need to really introduce moral hazard back into the financial system with real penalties. So I'd suggest only partly tongue cheek the following.
1. All the profits the banks made selling these absurdly complex products to stupid city official get clawed backed.
2. All bonus paid to employees based on these products are clawed back.
For the Cities
3. The mayor, city manager, treasury etc who made these stupid investment lose a years salary.
4. In the spirit of Shylock from the Merchant of Venice, I really want to see my pound of flesh for not paying ones debts.
For every 1 million euro of canceled debt a town is forgiven, the citizen of the town are on the hook for 10,000 hours of service to other communities who didn't elect stupid official. So if the10,000 citizens of Dumkoffville default 10 million euro they'd 100,000 total hours or 10 hours a piece.

Actually, I'd like to see the concept of forgiven debt be translated into community service at other levels. If you walk away 100K in mortgage debt, you owe 1,000 hours of community service.
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Old 04-19-2010, 11:34 PM   #29
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Originally Posted by dex View Post
OK,
So we have on the sell side:
- More Swap bombs out there
- The 2nd year presidential cycle
- T Theory August 28 top
- The question - How much further upside is there and is it worth the risk?
- Cycle theory - we are in a secular bear trend since 2000 but in a cyclical bull since March 2009
- Cycle theory: - I don't put much emphasis on this but it is interesting to see if it happens
Decision Point®: Chart Spotlight 2/27/2009
Hi Carl,
I really enjoy your service and have for about nine years. Thank you for all your hard work and dedication. I was wondering if you could tell me the potential technical "bottom" numbers for the Dow, S&P 500, and Nasdaq?
Thank you very much.

ANSWER: I don't follow the Nasdaq. I have rough targets of Dow 3000 and SPX 300 around late-2010. I wouldn't exactly call these "technical" targets -- I am guestimating a total decline of about 80%, using the 1929-1932 bear market 90% decline as a guide. The timing is based on the estimate for the next 4-Year Cycle low, which is due mid-to-late 2010.
While I can't swear by these estimates, I don't think I'm sticking my neck out too far.
Carl
80% This sounds like stock up on ammo and k-rations talk! What is this guy's history of predictions?
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Old 04-20-2010, 01:11 AM   #30
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I'm 95% stocks, so I guess I'm on the other side of this trade

I have a hard time envisioning real long-term deflation being a problem in a world with fiat currencies. Printing money will always be an easy solution to deflation.



Quote:
Originally Posted by dex View Post
I will probably going to 100% cash in the summer. There isn't much upside remaining and bad news e.g. Goldman - Sacks and below is coming out.

Deflation is more of a worry than inflation. Europe should be very cheap in the future. If you read some of the T-Theory it talks about being in a bear market with the bottom coming in the 13-16 time period.

Saint-Etienne Swaps Explode as Financial Weapons Ambush Europe - Bloomberg.com
The worst global financial crisis in 70 years arrived in Saint-Etienne this month, as embedded financial obligations began to blow up.
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Old 04-20-2010, 04:57 AM   #31
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...
4. New regulation is like a general who is preparing to fight the last war - New regulations fail for similar reasons.
I respect your opinion... but I disagree. Yes, people (organizations) seem to find loopholes (sometimes I think the PACs influence the politicians to create loopholes)... but it has to be addressed somehow, otherwise similar events will occur.

IMO - The entities that control our money system need to be tightly regulated and limited in the scope of their activities. Allowing them them to stretch over too much territory enables them to seek out exploits cross businesses that are not healthy for the public or the company.

Does America really need the Mega Banks that cross all boundaries of our financial system... So called "Too Bug to Fail"? In light of what happened... I can see a future that does not have those Financial Conglomerates... and I do not see how America or Americans are worse off.
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Old 04-20-2010, 07:22 AM   #32
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I have a hard time envisioning real long-term deflation being a problem in a world with fiat currencies. Printing money will always be an easy solution to deflation.
This sounds good and my initial reaction is to agree completely; then my inner Paul Krugman whispers, "Why didn't it work for Japan?".
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Old 04-20-2010, 09:43 AM   #33
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DON'T FORGET!

August 10. 2010 Bradley Turn Date that indicates we are going down! (The March 1 2010 turn date certainly had us going up!)

Audrey
Isn't that based on astrology?
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Old 04-20-2010, 09:48 AM   #34
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80% This sounds like stock up on ammo and k-rations talk! What is this guy's history of predictions?
He is well respected in technical analysis - try the link for more info.

As he says, it really isn't a projection; more of saying 'if the current market follows the depression market'.
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Old 04-20-2010, 10:08 AM   #35
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I can see a future that does not have those Financial Conglomerates... and I do not see how America or Americans are worse off.
There is no simple solution to the Big Wall St./Big Government/Big Business relationship. As government/business and debts got bigger so did Wall st. and banks to meet the needs to sell the debt and service it. With increased laws, regulation, capital requirements etc larger banks would be favored. The SWAPS and other instruments were based upon debt - that is the core issue.

At the core of the current financial problems is too much debt. A regulatory solution to the problem is the regulation of a Government's, Business and personal debt. Read about ratio analysis of business and you could devise a simple regulation to determine an appropriate amount and even an audit system.

These situations go in cycles because people forget the lessons of the past or it is different this time thinking. The next phase will be the dislike of debt (we loved it before).

In my posts I point out why new regulation will probably not work and past government policies are part of the problem not for political reasons but why the causes of the problem are not being addressed. The new regulation issue is/has become a politically polarizing issue that distracts people from the core issues and real solutions.

I'm not too excited about any new regulation because it does not address the core issue - debt - and will probably not address the future crisis and possibly will be repealed or weakened decades from now 'when it is different this time'.
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Old 04-20-2010, 10:27 AM   #36
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Isn't that based on astrology?
Yep!
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Old 04-20-2010, 11:42 AM   #37
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Yep!
Well, gee, I'd think that technical analysis should be at least as well respected as astrology...
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Old 04-20-2010, 02:54 PM   #38
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Well, gee, I'd think that technical analysis should be at least as well respected as astrology...
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Old 04-21-2010, 05:55 AM   #39
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OK,
So we have on the sell side:
- More Swap bombs out there
- The 2nd year presidential cycle
- T Theory August 28 top
- The question - How much further upside is there and is it worth the risk?
- Cycle theory - we are in a secular bear trend since 2000 but in a cyclical bull since March 2009
- Cycle theory: - I don't put much emphasis on this but it is interesting to see if it happens
I have no idea what we should do and I don't know the future, except that it's uncertain and risky. Sure, it always is, but this time it's pretty spectaculair:



And now back to our regular scheduled therapy.
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Old 04-22-2010, 09:33 AM   #40
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Snohomish Busts Synthetic Rate Gone Awry as AIG Swaps Blow Up - Bloomberg.com

Another example
April 21 (Bloomberg) -- Water and electric customers in the Seattle area, most of whom pay U.S. taxes, will pay an additional $14 million to get out of an agreement with American International Group Inc., the insurance company rescued from insolvency in 2008 by American taxpayers.
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