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Thread: Economy is reaching an 'inflection point' !!!

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    Default Economy is reaching an 'inflection point' !!!

    unfortunately, I can no longer elaborate on the reasons behind this in Dollar Den ... but any dancers with significant investment portfolios may want to investigate / consider ...

    - lightening up on their stock shares in large international companies
    - buying some LONG term US gov't bonds
    - buying some physical gold



    The one fact I can add is that yesterday's US stock market price action involved a slow and agonizing resumption of week long declines ... right up to the last hour. At that point, SOMEBODY managed to cause the markets to rocket upwards erasing the entire day's losses and taking the markets into the 'green' just prior to the market closing. This particular 'stick save' pattern has appeared in the past and warrants attention.

    ~

    usual disclaimer - not professional investment advice - do your own due diligence etc.
    .
    Last edited by Melonie; 09-13-2011 at 02:02 AM.

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    Banned Eric Stoner's Avatar
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    Default Re: Economy is reaching an 'inflection point' !!!

    Quote Originally Posted by Melonie View Post
    unfortunately, I can no longer elaborate on the reasons behind this in Dollar Den ... but any dancers with significant investment portfolios may want to investigate / consider ...

    - lightening up on their stock shares in large international companies
    - buying some LONG term US gov't bonds
    - buying some physical gold



    The one fact I can add is that yesterday's US stock market price action involved a slow and agonizing resumption of week long declines ... right up to the last hour. At that point, SOMEBODY managed to cause the markets to rocket upwards erasing the entire day's losses and taking the markets into the 'green' just prior to the market closing. This particular 'stick save' pattern has appeared in the past and warrants attention.

    ~

    usual disclaimer - not professional investment advice - do your own due diligence etc.
    .
    What apparently caused the last minute uptick was a rumor reported by the Financial Times that China was going to step in and start buying European debt.

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    Default Re: Economy is reaching an 'inflection point' !!!

    ^^^ 'apparently' !!! However, that 'apparent' explanation contradicts the fact that the US dollar has just risen to 1.37 vs the Euro.

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    Default Re: Economy is reaching an 'inflection point' !!!

    European bond markets reckon Greece is defaulting this year. All hell will break loose on the global markets - look what happened when Russia did it. Time to hide your money unless you're feeling lucky, IMHO
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Banned Eric Stoner's Avatar
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    Default Re: Economy is reaching an 'inflection point' !!!

    Everyone knows Greece is going to "default". It's just a question of when and HOW. There are defaults and then there are DEFAULTS.

    I'm sorry but it is impossible to discuss the facts of this situation without mentioning a few "political" aspects.

    Right now everyone is waiting to see whether the ECB and Germany give Greece the additional aid it needs. Germany in particular is desperately trying to avoid a "fool me once shame on you , fool me twice shame on me " scenario. They do not want to buy or guarantee any more Greek debt unless and until Greece follows through on its austerity budget.

    It appears that China has recognized the obvious i.e. if Europe has another banking crisis it will lead to a worldwide crisis seriously affecting their prime export market, the U.S. Thus it is likely that the Chinese WILL follow through and buy some European debt. Will they buy enough to make a difference ? ( or will they buy too much ?) are the serious questions nobody yet knows the answers to. If they don't buy enough then the ECB will have to issue more Euros and Germany will have to pony up as well. If they buy too much, there are two concerns : 1. The price of said debt will rise far beyond its actual value ( possible but unlikely ) or 2. That Europeans will react to the bailout the way many bailed out people do. By having their bad behavior rewarded they will continue to behave badly. That is certainly a prime concern of the Germans.

    Another alternative is to effectively let Greece default as NYC did in 1975. Hopefully there would be strict outside supervision of Greek finances and a serious restructuring of its debt.

    These things happen. It happened to Russia, Indonesia, Argentina etc. and the world did not come to an end. The big complication for Greece is that it has no control over its own currency. On the one hand it prevents them from going Zimbabwe or Weimar but it also prevents them from inflating at all.

    Historically, worldwide recessions last one to three years. Unless they are caused ( as this one was ) by a banking crisis. The Great Depression was such an event and lasted six to ten years ( depending on the country ). We are now in Year Three and probably have at least three more years to go. Here I must refrain from further analysis and prognostication to avoid stepping too far into the dreaded "political" quagmire. Suffice to say that I am still long on gold and certain commodities and am less than 50% invested in stocks.
    Last edited by Eric Stoner; 09-22-2011 at 10:39 AM.

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    Default Re: Economy is reaching an 'inflection point' !!!

    ^^^ you probably stepped over the 'line' by even mentioning the 1930's depression ... which automatically introduces political content.

    Yes it's frustrating not to be able to discuss the forces at work in the world ... and more importantly US ... economy. But if what is about to happen for the third time turns out the same as the first two times, gold and long term T bonds will be some of the few 'positive' options. Holding stock in US international companies that are depending on overseas sales / foreign currency earnings for the bulk of their corporate income will not be a good place to be.

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    Default Re: Economy is reaching an 'inflection point' !!!

    ^^^ Oh dear. You mean any historical reference point is too political ?

    O.K. Next time I'll try to do it with shadow puppets.

    All kidding aside, I share your frustration but I honestly tried to post the foregoing in as politically neutral a way as possible. It's why I did not go a LOT further with my analysis.

    From a strictly historical pov, what I posted is inarguable historical fact. Unlike most previous "panics", the Great Depression was caused by a banking crisis. Like other banking system based recessions and depressions it lasted a lot longer than other cyclical recessions. To avoid running afoul of the "Political Police" I will resist the urge to recount government policies that have proven to prolong and shorten such economic downturns.

    One possible quibble- If you and I are right ( wink, wink ) why would you put your money in long term bonds ? If we get serious inflation or even our own currency collapse, that is the last place I'd want to have my money.

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    Default Re: Economy is reaching an 'inflection point' !!!

    ^^^ at the risk of crossing the 'line' myself, google "Operation Twist" ! I was also NOT implying that long term T bonds should be bought and held to maturity ( as you say huge risk of future losses based on the longer term future fate of the US dollar and US interest rates ), but actively traded like they were a commodity. And, of course, if the buyers of US T bonds are measuring their performance in terms of a Euro home currency versus a US dollar home currency, their risk / reward equation looks completely different ( hint hint nudge nudge ).


    You mean any historical reference point is too political ?
    not every historical reference is as politically charged as the 1930's depression. And the 'facts' surrounding the 1930's depression has been shown by past experience in Dollar Den as well as in the world of economics professors to be infinitely arguable. To wit ...

    “There are no facts, only interpretations.” ― Friedrich Nietzsche
    “You can ignore reality, but you can’t ignore the consequences of ignoring reality.” - Ayn Rand

    I'm actually starting to understand Pryce's point in this regard ... that infinite argument is not likely to change the positions of any of the 'arguers', and thus primarily serves to 'clog up' Dollar Den with economic / financial theory that is not likely to be of immediate interest to most Dollar Den readers ( i.e. younger dancers with no formal education in economics / finance ).

    Ultimately, the same is probably true in regard to past Dollar Den threads which attempted to 'predict' future economic direction. Again, younger dancers with no formal education in economics / finance weren't likely to put much faith in, or take any action, as a result of such 'predictions' ... and even less so when those 'predictions' were fraught with arguable analysis and occasionally outright 'arguments'. Personally speaking, I have faith that at some point those younger dancers will start asking questions in regard to the reasons behind their declining dancer earnings potential, their difficulty in obtaining credit i.e. apartment leases, credit cards, auto loans, mortgages etc, their difficulty in finding 'safe' places to park the savings from their dancing earnings etc. But until they start asking, attempting to 'force feed' economic / financial information is probably counterproductive.

    Thus my 'resignation' from Dollar Den Moderator status and the end of future posts like this ... with a transition to being just one more StripperWeb member !

    ~
    Last edited by Melonie; 09-15-2011 at 04:14 AM.

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    Default Re: Economy is reaching an 'inflection point' !!!

    ^^^. Yeah. I'm starting to "get it " myself. As much I enjoy political discussion and LOVE history, I see your point about the ultimate pointlessness of argumentation. At least to a certain extent. I suppose that ultimately it is the right thing in the wrong place.

    Similarly, with BOA laying off 30,000 people and Wall St. earnings expected to be down by as much as $10 billion, it seems to be a chalk bet that dancer earnings are going to be down substantially as well. Along with the value of the average 401K and other investment portfolios. I'll leave figuring out the ultimate hows and whys to each individual reader ( they have access to the same resources as you and I ) and will pass on the opportunity for one final : " I TOLD YOU SO ! ".

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    Default Re: Economy is reaching an 'inflection point' !!!

    again I can't elaborate on underlying issues due to ban on political content, but for a fact the US FED just announced that 'Operation Twist' WILL take place to the tune of $400 billion at least. Immediate results have been ...

    - long US T bonds quickly flew to a record high
    - gold price held with a minor hiccup
    - stock values for major US corporations with large overseas market components took a hit

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    Default Re: Economy is reaching an 'inflection point' !!!

    Quote Originally Posted by Melonie View Post
    again I can't elaborate on underlying issues due to ban on political content, but for a fact the US FED just announced that 'Operation Twist' WILL take place to the tune of $400 billion at least. Immediate results have been ...

    - long US T bonds quickly flew to a record high
    - gold price held with a minor hiccup
    - stock values for major US corporations with large overseas market components took a hit
    And the Dow continues to plummet today. Over 400 points. Gold is off more than $70. I couldn't resist. I bought a few ounces.
    Last edited by Eric Stoner; 09-22-2011 at 10:54 AM.

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    Default Re: Economy is reaching an 'inflection point' !!!

    Gold is off more than $70. I couldn't resist. I bought a few ounces
    I'm actually thinking of 'nibbling' on some shares of major gold miners ... considering the beat-down their share prices have taken. Still wouldn't touch silver though in any form ... too much 'industrial' demand component with silver whereas demand for gold is still mostly 'safe store of value' related.

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