Global financial system implosion begins

[Pickman's model]

That would be redenomination. Maybe the invented word redonimation means being asset stripped of everything including democracy just so you can keep trading the same bits of paper. We need a word for that.

and now we have one.

 

[yield]

The stock markets have recovered i think. Why tho? The central bank of china doesnt have a clue what its doing

'Good news' shock could kill the five-year-old bull market
Aug 20, 2014
Counterintuitively bad news is good for USA & UK stocks as it means a continuation of easy money, near zero interest rates, and possibly more Quantitative easing.

The current turmoil is likely to stop the Federal Reserve increasing interest rates.

Question is how far you can kick they can down the road? What happens if people lose faith in the central banks?

 

[mauvais]

That article's prophecy doesn't seem to have materialised in the last year. Again I'm no economist but it feels basically flawed in many ways.

For one, bad economic news doesn't translate into good news for investors - look at your pension during the economic crisis and you'll see you've been set back by years. Incidental bad news (terrorism etc) might be good news for traders, because there's no material systemic damage from them, and if you second guess the sentimental reactions well, you can profit off the panicked. But if the whole thing is coming down, because global economies are based heavily on junk debt let's say, then bad news is mostly just bad news. That makes it an irrelevant adage.

If you look at patterns since the 1980s, then arguably we are in a bubble and due a sudden correction, although even that's not that simple. Look at for instance the FTSE100:

You can see 1987's Black Monday, the dotcom bust and the housing/debt crisis on there, but then if you look at the general pattern of the ever onward march, are we that far off the overall trend right now? And then you have to ask yourself whether thirty years of continual growth is itself a trend you can rely on.

As far as anyone can tell, the bear market doesn't automatically die of old age or from shocking events, but because it's overcooked against reality.

 

[pocketscience]

The stock markets have recovered i think. Why tho? The central bank of china doesnt have a clue what its doing

I think the term used in the finance industry to describe yesterdays "recovery" is "a dead cat bounce" ;-)

 

[yield]

If you look at patterns since the 1980s, then arguably we are in a bubble and due a sudden correction, although even that's not that simple. Look at for instance the FTSE100:

I could choose any arbitrary date range. Down 12.5% in the last three months.

https://uk.finance.yahoo.com/echarts?s=^FTSE#symbol=^FTSE;range=1d

You can see 1987's Black Monday, the dotcom bust and the housing/debt crisis on there, but then if you look at the general pattern of the ever onward march, are we that far off the overall trend right now? And then you have to ask yourself whether thirty years of continual growth is itself a trend you can rely on.

As far as anyone can tell, the bear market doesn't automatically die of old age or from shocking events, but because it's overcooked against reality.

Overcooked as in over indebted? Without a dose of inflation to erode the debts.

There's a good chance of more Quantitative easing. Got to protect the 1%.

 

[mauvais]

Overcooked as in speculative market sentiment outpacing reality, to the extent that there even is a reality behind stocks and currency. And as for what time frame you pick, the shorter the more dangerous.

 

[yield]

Overcooked as in speculative market sentiment outpacing reality, to the extent that there even is a reality behind stocks and currency.

Thanks for explaining. I don't think it's all smoke and mirrors.

And as for what time frame you pick, the shorter the more dangerous.

What are the best standards to use? It's lies, damned lies, and statistics.

Your graph looks very different when you adjust for inflation.

http://stockmarketalmanac.co.uk/2014/01/ftse-100-index-1984-2013-price-performance/

Saudi Arabia Is Seeking Advice on Cutting Billions From Its Budget in the Wake of the Oil Crash
25/08/15

Saudi Arabia is seeking advice on how to cut billions of dollars from next year’s budget because of the slump in crude prices, according to two people familiar with the matter.

The government is working with advisers on a review of capital spending plans and may delay or shrink some infrastructure projects to save money, the people said, asking not to be identified as the information is private. The government is in the early stages of the review and could look at cutting investment spending, estimated to be about 382 billion riyals ($102 billion) this year, by about 10 percent or more, the people said. Current spending on areas such as public sector salaries wouldn’t be affected, the people said.

More wage repression and demand destruction.

 

[mauvais]

You can't fully separate it from inflation, as to an extent it *is* inflation, since it's fundamentally based on economic growth. Nonetheless an adjusted graph tells you much the same: that we're not necessarily that far from the flat trend.

 

[yield]

Mini flash crash? Trading anomalies on manic Monday hit small investors.
August 26

Millions of these Main Street investors were locked out during the crucial hour when the worst hit, just as markets opened Monday. Popular trading platforms run by TD Ameritrade, Scottrade and others ran slow or not at all as panic grabbed hold. It took just six minutes for the Dow Jones industrial average to suffer its biggest drop in history. And these investors could only watch.

“It makes me wonder if a guy like me has a fair chance or not,” said Israel Hernandez, a lawyer in Casa Grande, Ariz., who could not log onto his online broker.

Well I never. It's almost like it's skewed a particular way.

 

[ska invita]

I missed this on Monday: http://www.independent.co.uk/news/u...rns-former-gordon-brown-advisor-10469509.html

A former adviser to Gordon Brown has urged people to stock up on canned goods and bottled water as stock markets around the world slide.

Damian McBride appeared to suggest that the stock market dip could lead to civil disorder or other situations where it would be unreasonable for someone to leave the house.

“Advice on the looming crash, No.1: get hard cash in a safe place now; don't assume banks & cashpoints will be open, or bank cards will work,” he tweeted.

“Crash advice No.2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.

“Crash advice No.3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.”


“We were close enough in 2008 (if the bank bailout hadn't worked),” he said. “and what's coming is on 20 times that scale”.

 

[mauvais]

Mini flash crash? Trading anomalies on manic Monday hit small investors.
August 26

Well I never. It's almost like it's skewed a particular way.

You'd have to be a numpty to think that you, as a retail punter, ever had a fair chance in the first place. Never mind that the brokers couldn't hack it - just as retail banks can't in a crisis a la Greece or Northern Rock - but you're inherently at the bottom of the food chain way down after HFT and the huge amounts of infrastructure expense that the top players go to just to save nanoseconds.

Also, small "investors" my arse. If you're using the platforms as described then you're probably not investing, but instead using spread betting or CFD products, which is politely called trading and less politely called gambling.

If you were investing, with a credible and suitable strategy, then you'd probably have left most of your money right where it was.

 

[Sprocket.]

Sadly you need a fair amount of money to be included in the free market.

 

[Artaxerxes]

If you were investing, with a credible and suitable strategy, then you'd probably have left most of your money right where it was.

Sadly the only way to actually save money these days, or at least earn more than a paltry 2% interest which doesn't even keep up with inflation is to invest it.

 

[mauvais]

Sadly you need a fair amount of money to be included in the free market.

If your aim is short term, rapid, optimally gamed trading, very much so. Not so much in the long term.

Sadly the only way to actually save money these days, or at least earn more than a paltry 2% interest which doesn't even keep up with inflation is to invest it.

Indeed, but it's not like this is novel; if you have a personal pension fund, and you're not nearing retirement age at which point it'll be derisked to something approaching cash, then it is and always was invested. So it was behind the curtain as regards cash in building societies, for example, except that you had a kind of insurance that maintained a tangible value. At least that the costs and difficulty of personal investment have come down is, within the confines of our financial system, a good thing.

 

[yield]

Maybe This Global Slowdown Is Different
Aug 31, 2015

These are all characteristic of a cyclical downturn. And this is a cyclical downturn -- oil prices will rise again someday. So will emerging-market stock and bond prices.

But there could also be something else afoot. We could be seeing early signs of longer-term changes in the global economy -- changes that could be enormously positive, but also have the potential to upend a lot about how the world works today.

He goes in to some depth.

Is Silicon Valley in Another Bubble . . . and What Could Burst It?
September 1, 2015

Whenever I even suggested the word “bubble” in my reporting, I became a punching bag. After I scrutinized the ethics (and preposterous valuation) of Path, an ill-fated social network, Michael Arrington, once a nexus of power in Silicon Valley who had invested in the start-up, called me a “pit bull” and said I wasn’t a very noble person. But lately the worries have spread. There are now fast approaching 100 unicorns based in the U.S. alone, and counting. The NASDAQ recently closed at an all-time high, surpassing a record set right before the dot-com crash in 2000. The Shiller P/E ratio, a measure of the ratio of price to earnings, has a number of investors worrying, with The Wall Street Journal noting that it shows stocks are “frothy.”

Hit by cheap oil, Canada's economy falls into recession
Sep 1, 2015

The Canadian economy shrank again in the second quarter, putting the country in recession for the first time since the financial crisis, with a plunge in oil prices spurring companies to chop business investment.

Australia too from the look of things.

 

[InfoBurner]

He goes in to some depth.

'There was a bubble, then I was a punching bag, then a nexus of power with a pitbull said I was'n't noble. Now 100 unicorns have got something high and something about a wall...'

For fucks sake! I try to give economic news some serious consideration but that quote from Vanity Fair is from a wrong planet. Is that what 'some depth' means?

 

[yield]

'There was a bubble, then I was a punching bag, then a nexus of power with a pitbull said I was'n't noble. Now 100 unicorns have got something high and something about a wall...'

For fucks sake! I try to give economic news some serious consideration but that quote from Vanity Fair is from a wrong planet. Is that what 'some depth' means?

"some depth" referred to the bloombergview at the top with all the graphs in the link.

A lot of the vanity fair article is a bit wtf. Unicorns I think refers to internet start ups worth more than $1 billion. It's all a bit history repeating itself.

 

[Dandred]

Still waiting for this implosion.....

 

[Falcon]

China is the world's largest consumer of copper, steel, iron ore, automobiles, aluminum, mobile phones, nickel, rice, tobacco, meat, Swiss watches, television, rubber, potash, energy, robots, beer, machine tools, red wine, flavored milk, rare earths, wheat, coal, and many other raw materials and products.

So its problems are the world's problems.

 

[yield]

The Guardian view on China’s meltdown: the end of a flawed globalisation
1 September 2015

Clad as it is in jargon and technicalities, financial meltdowns can often seem like an elaborate spectacle taking place in a foreign country. So it is with the trillions wiped off shares since 24 August’s “Black Monday”. Obviously it’s a huge deal, but beyond the numbers on Bloomberg terminals it’s hard to put into perspective. Yet one way to think about what has happened in China over the past couple of weeks is the drawing to a close of an entire system for running the world economy.

 

[teqniq]

Yup it's a broken system and unless we pull ourselves together we we are all fucked. (imo of course)

 

[yield]

Yup it's a broken system and unless we pull ourselves together we we are all fucked. (imo of course)

There's still time. The solution though is inimical to capital and the ruling classes interests.

Write off the debts, protect the commons and redistribute the wealth. Fingers crossed

I fear they'll appeal to patriotism and protectionism and push us to war before that. IMHO

 

[yield]

Why a big slump in South Korea’s exports matters
Sep 1st 2015

Market watchers are less sanguine. Frederic Neumann of HSBC, a bank, says the plunge is “pretty serious”, not least because South Korea has “long been a reliable bellwether” for global trade. South Korean manufacturing sits at the top of the production chain, he says: a big chunk of its exports do indeed go into other finished goods, like Chinese smartphones and American laptops. But if demand slows there, so do requests for chips and screens. That means that Korean macroeconomic data “picks up very early changes in the global industrial cycle”. Neither is a slowdown in China the only source of export weakness; South Korea's exports to the euro area plunged by 21%, more than twice the decline in exports to China.

 

[gosub]

China's new oil contract signals shift from Brent and US dollar

 

[Falcon]

China's new oil contract signals shift from Brent and US dollar

It will be interesting to see if the US cuts their undersea cables to prevent this, like they did when Iraq tried this stunt.

 

[gosub]

It will be interesting to see if the US cuts their undersea cables to prevent this, like they did when Iraq tried this stunt.

Might explain why the Chinese fleet is on a Pacific sightseeing cruise

 

[not-bono-ever]

this is quite beautiful. all about implied volatility ( a serious part of options mechanics)

Market Volatility Has Changed Immensely

*eta you probably didn't know there was a volatility index or indeed an index that measures the volatility of the volatility index*

essentially, the volatility of the implied volatility index is causing ..erm...uncertainty about volatility. which can impact the prices of the stock derivatives on which the index is derived. which can impact the price of the stock itself down the line.

like an MC esher concept piece in a k hole

 

[not-bono-ever]

.

 

[not-bono-ever]

Massive intervention by PBOC in the offshore yuan today.all carried out by proxy banks. PRC trying to avert depreciation it seems.trying to spook the speculators

 

[elbows]

It will be interesting to see if the US cuts their undersea cables to prevent this, like they did when Iraq tried this stunt.

I think you mean Iran.