kd great ticker as always, but why should the banks care they went from being on the street to record bonuses and business as usaul with an implicit guarantee by fed and tsy all is ok. Nothing has changed and will change until the people wake up and unfortunately that will probably be when everybody is fighting for their own life. Unfortunately most people dont care and it is business as usaul

No government in the world will listen to this simply because they don't want to be held accountable for the carnage that starts minute after you start putting up some measures against this insanity.

KD, First time poster, wondered if you'd seen the following:

http://business.asiaone.com/Business/New....

KD,
I was running on the treadmill at the gym and Cramer was on without the sound. The caption underneath said "Cramer syas time to grab the bull by the horns." And then they talked about the Pimco fund and the caption said something I didn't quite get. I think thet were dismissive of it. Just FYI.

Excellent Ticker.

Quote:

The move will be seen as a financial vote of no-confidence in the Government's handling of the economy.

I'd love to see this snowball as other investors race to the exits ... It will happen, eventually.

On 12/1/09 Bill Gross issued a comment tracking almost exactly your (KD) language about govt continuing to reflate and thus market going up for the foreseeable future. He said Ben B. will keep int. rates ridiculously low to force investors into stocks or corp. bonds for return.
It's available on the Pimco website under fund commentary and other parts of it are a bit odd - he talks about withdrawing all his money from the bank the morning of the Lehman collapse, and recommends buying utility stocks.

Aja, they'll try. The problem is that they're still "reflating" but the indices are losing momentum.

The marginal utility of more and more dilution eventually wanes and gravity takes over. The further up you pump things the longer you have to fall, and in a vacuum there is no terminal velocity - the higher up you are the worse the impact is.

I understand that, and was looking around last night for some comment from Gross or Pimco which is more current. That 12/1 comment was best I could find and it reads very oddly to me -- but I suppose their later announcement re going to cash fits in with it at least somewhat. Still puzzled about Pimco

I think they looked at the Z1 that came out on 12/10 and realized what I've been saying - it ain't working.

This is an excellent explanation of the current economic situation and the dangers that are present to everyone, investors and non-investors alike. The evidence is there for those who want to see it and act appropriately to protect themselves. I'm completely out of the markets because this information is forecasting a significant economic decline. The only unknown is when it will occur.

-------------------------------------------------
A trillion here, a trillion there and pretty soon you're talking about real money

*************************************
Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.

- Kenneth Boulding, economist

My annual brokerage statement had this on it:

Quote:

hope is not a strategy!
In recent weeks, the market has shown positive signs of life. Don't be sitting on the sidelines and miss the turnaround.

IMO we're just one major geopolitical or terrorist event away from a major market dislocation. PIMCO and others are moving quietly to the exits because they know that $80 oil + Iran + Pakistan + negative credit/money supply rates + 20% unemployment =/= economic recovery.

I pass these tickers around occassionally, generally when they are less ranting, and more analysis, as this one was. Typically, I get negative responses. I sent this ticker today to my best friend, who is one of the smartest people I've met personally. Here's his reply:

Quote:

You shouldn't read this guy. I have never seen him write anything remotely positive. He was one of the people saying the market was going to fall to 5000 back in the summer and where are we now? Double that. He is a reactionary, conspiracy theorist trying to push his own agenda and he is very negative. Negativity never got anyone anywhere.

That being said, I have read a lot of things saying that people expect a correction in the first part of this year for some of the reasons he talks about. I hope he is wrong but I won't be shocked to see the market drop by 10%. From what I've been reading though, it still sounds like a diversified portfollio will survive and potentially thrive in these markets. Bottom line is you have to try something because interest rates aren't high enough to beat inflation so unless you just want to watch your cash lose value over time the markets are still the place to be. IMO of course. :)

Heads are really deep in the sand out there, people. We're waking up as a nation, but not enough of us, and not quickly enough. I no longer believe the problem will be fixed by the people. I don't think anything gets fixed until the country burns, and then its only going to be fixed in a few select places where the people rule by lethal force. There won't be fun or happy times again in my life time.

I'm so ****ing down today...

What I remember about the 1999 Nasdaq craziness is that EVERYONE said this is not real, we are in a bubble and that it has to crack. That is was not normal.

But also EVERYONE went along and played the game figuring the bubble would go on for a long time and they could make a fortune a get out.

Nearly EVERYONE lost their shirt who played the game.

@c., you're now the second person today to comment that you receive replies which decry Karl's tickers as "negative". "Negativity never got anyone anywhere" etc.

I wonder if anyone can identify for us where this concept is coming from, that "you're being negative" is in any way a reasonable counter-argument to *anything*. Of all of the things I might contemplate using in retort to an argument with which I disagreed or which I didn't wish to hear, I don't think it would ever have occurred to me to declare an argument invalid simply because its conclusions are unpleasant.

It seems to me that if this idea is widespread, there must be some recent champion of it out there.

Mtdm wrote..

It seems to me that if this idea is widespread, there must be some recent champion of it out there.

http://tickerforum.org/cgi-ticker/akcs-w....

Mtdm,
Yeah it's just another easy way to "discredit the message by attacking the messenger". It's got to be a common human reaction...I get hit with it all the time too.

"Negativity never got anyone anywhere"?

Sounds like the mindless slogans I got in school - "Violence never solves anything" (Except maybe WWII or a mugger with a gapping chest wound) "We are all responsible" (No I'm not even here by choice and have no power to alter things so how can I be responsible teacher?)

Negativity will get you down root cellar when you see a tornado coming down your street. Negativity will have you pull over and get a room in freezing rain. Negativity will see you cash out when manipulated crooked markets become unpredictable. Negativity will see you ask the doc about that lump before it is as big as a baseball. Negativity = caution and backups.

Yeah in fact most things that qualify as morally good are negative

DON'T steal, DON'T murder.


how about good deeds?

...the merciful ELIMINATION OF hunger or pain - a negative.


How are these for negative statements?

"Maybe we shouldn't be drowning women in ponds because we suspect them of witchcraft"

"hey, I think Hitler shouldn't be made Chancellor of Germany"

and so on.

KD wrote..

I argue in reply that without the expansion of credit a durable recovery in asset prices is not just unlikely it is mathematically impossible, and that in fact current asset prices are both predicated and dependent on credit expansion that is in fact not happening now and mathematically CANNOT happen on a forward basis.

We'll see who's right.

My bet is on the math.

KD,

When you talk about GDP growth attributable to debt, don't you need to compare the total amount of aggregate GDP that occurred due to growth versus the amount of debt added. At 5% growth about $50T of GDP during 00-09 was attributable to growth. Debt represents about 50% of this total before including the multiplier effect. So rather than debt representing 21% of the growth it would represent directly 50% and more probably 75% - 100%. In other words, real growth (without added debt) was in the range of 0% - 1.25% if you even believe any of the published GDP figures to begin with.

Bagbalm, although I agree with your intent, I don't see how any of your examples are properly described as negativity. Prudence, perhaps. Effective risk assessment and mitigation, to be sure. Caution, maybe. But the fact of the matter is that I don't go around thinking of people who behave recklessly as acting positively.

@Sharpe -- wow. that is scary. And yes, now that I know where to look I just googled "positive thinking" and got a dose of results about which I am quite negative.

Independent, no.

The total gross GDP is shown in the table. So is the aggregate growth in debt.

If you remove the debt growth then the gross GDP decreases by that much immediately. The multiplier cannot be determined (but I do agree there is one greater than 1.0) but at an absolute minimum the total comes back off.

We "added" ~$50 trillion in GDP during the 2000s (compared to the 90s pace) and added $14 trillion in debt (again, compared to the pace of addition in the 90s.)

You have to look at the delta. It's about 22%.

Quote:

And so to the climax: the financial crisis happened, Ehrenheich says, because CEOs increasingly removed from reality on their enormously inflated salaries, narcissistic, their egos pumped up by positive-thinking gurus could not countenance a world in which their specific desires did not equal a concrete result

This is an absolutely accurate assessment, IMO. I was once told that "we are not being paid to anticipate failure". IOW, the boss doesn't want to hear any negativity, just happy, happy.

It's a corporate culture of superstition. Think negative thoughts, bad things happen. Positive thoughts...

To make things worse, the person who gave the warning will end up fired if it comes true, while the smiley face people get promoted.