\"The Big Short\" . . . .

[crusher]

I watched "Wolf of Wall Street" instead. Pretty long movie. I bailed before the end, was afraid it wasn't going to end well.

No easy solution to this mess, just try not to dwell on it and appreciate what lot you have. Keep diversifying and eventually it will work out.....so they say.

[tweety]

But what will stop this from happening again?

It starts at the top; The U.S. Federal Reserve

Errol, i am sure by far most respect yours and cottons view on many financial things as you both eat breathe and sleep it. So i'm going to ask you guys to speculate if you could be so kind and adventurous,

What's going to happen in the next 3 years?

[Oliver88]

Rand Paul is promoting a campaign that is pushing "Audit The Fed".

[errolanderson]

tweety . . . 2016 - 2018 may be the epic centre for financial markets. Commodity markets have already melt down. Stock markets must be able to stand on their own without the support of central bank policy.

U.S. Fed policies have lost their impact. QE has lost its sizzle to support equity buying. The Fed is attempting to hike rates at a time the U.S. economy is contracting. This could be be a total mis-fire.

U.S. decision makers don't seen to understand that global markets are far bigger than the U.S. economy. Low oil prices were no problem to the U.S. two weeks . ago . . . now they are.

The equity bubble is now threatening to pop. The stock rally stateside has been artificially engineered via corporate stock buybacks and QE (IMO).

There is a global cold war or currency war intensifying between central bankers. This outcome will not be good.

China economy is a problem and getting worse

There is risk of another credit crisis that could freeze money flow between lenders. The LIBOR and SIBOR rates are starting to rise. This means that banks want more return to lend between themselves.

The U.S. cannot tolerate their high dollar. The U.S. service sector is the last man standing (IMO) Manufacturing now in significant recession.

Anyone heard of Greece??

How this shakes out over the next three years will be a fascinating test on economics. All I know for sure is that true economics also rule over central bank manipulation.

[biglentil]

There are so many ways that this could play out over the next decade. No one really knows how it will play out, they are lying if they say they do.

Senario 1 - QE unleashed, oil prices recover quickly to mid $80's just like 2009, can kicked down the road crisis adverted once again. Great job central planners hip hip horray! Buy the f@$king dip and "Flip That House" is once again all the rage.

Senario 2 - China reveals its alternative reserve currency the gold backed Yuan this spring endorsed by the BRICS nations and AAIB. Almost overnight the USD tanks hard and fast while investors and central banks pile in. USA considers it an act of war... and enters an unbreakable depression that eventually reduces the standard of living to that of a fractured third world country.

Senario 3 - MF Global was the canary in the coal mine. Dozens of large investment firms holding massive naked short positions fold up like cheap umbrellas. This spooks investors and the longs. They almost unanimously request settlement in the physical commodity. Unfortunately for them the ratio of paper to the underlying commodity available for delivery is a 1000 to 1. They are offered shares of paper etfs like GLD and SLV instead but they aren't impressed. The physical price completely disconnects from the published futures price. The 600 trillion dollar derivatives bubble has imploded and futures prices are irrelevant. Consumers on the street notice the price of everyday staples spiralling higher and higher daily. People trip over themselves to spend like no tomorrow before the next imminent price increase or worse the sold out sign. Cash has become a hot potato and government price controls don't help. Store shelves are bare as the store owner cannot afford to restock at a loss. To make matters worse farmers are hoarding grain to try and protect themselves from skyrocketing inputs. No matter how much the media and government try to reassure the public it doesn't work. The damage is done the trust in the value of the dollar is gone and not coming back. It may be 100 years or more before anyone trusts a paper promise again.

It could be any one of these senarios or a combination of many more. No one has a crystal ball. The safest starting position is to diversify, grow a garden, keep livestock, have a backup wood stove, catch a fish, hold some pm's including lead. Buy hopper bins on aeration instead of stocks, store fertilizer, keep seed, and own a homestead. Some may call that a prepping lifestyle I call that real wealth.

[farming101]

Biglentil, I think #1 possibility is only a matter of time. How
long it will work is questionable.

Don't see #2 happening with any success.

#3 is going to happen, but not nearly to the extent it needs to.
If this were allowed to play out it would get rid of a lot of play money type debt
that everyone is wringing their hands about.
Derivitives-Don't the guys that buy these things ever read the little words
in the contract? Warning, you can loose your total investment
Really, in many cases if the one demanding payment finds it impossible
to collect they have a write down or a melt down and poof! they
are gone and so is the debt.
Bankruptcies must be allowed to run their course. If not, no
one will ever know how much in debt the world really is.

[biglentil]

Senario 1, 2, 3 all inflationary.

Senario 4
Central banks around the world recognize the futility and inherant damage to the market of artificially low interest rates and QE. They decide against stimulus or bailouts. They realize that the withdrawl systems from the cheap money may be painful but necessary to right the ship. Justin Trudeau realizes this is likely political suicide, unemployment may temporarily buldge, bombardier Canada's loved national brand may cease to exist, and public spending will need to be cut. He likely will lose alot of friends in high and low places but its necessary tough love. Deflation is a gurantee and many will feel the pain of higher rates. Savers will once again be rewarded and malinvestment punished.

This senario is about as likely as pigs flying in my view and the only deflationary senario i can think of. Its a race to the bottom among central banks.

[cottonpicken]

Finally got the movie to work,scares the bijeezus out of me because it only confirms what we are all talking.Brad pitts character was interesting,an old retired trader turned prepper.

I have no doubt there will be a crash just what will it look like,you could have the dow at 30,000 but be in a lot of pain.

The debt will have to be dealt with but it can be done in a few different ways so thats up to policy makers.

ludwig von mises has a quote that goes something like"you can not escape the crash brought about by a credit fueled boom,only whether to deal with it sooner to lesson the pain or later with a collapse"can't remember how it exactly went.

[LWeber]

If people stop receiving interest payments on the bonds that's default and the currency gets smoked.

If teachers policemen and nurses stop getting paid it will be chaos.

If they jack taxes they hammer GDP

The situation is so bad they MONETIZED the debt!

We are not getting out of this. The thought some political leader has some magical solution is laughable at best.

The path of least resistance is control print

Bump the 2016 thread
Classic Cottonpicken...

[Guest]

miss that guy
visionary for sure

[LWeber]

Bump the 2016 thread
Classic Cottonpicken...

Stock markets haven't been as volatile as the grain markets .

Grain markets are insanely volatile ...

In the old days we used to gasp at a $10.00/MT move in a day - we've been trading $20/high low spreads for months...

No one here has traded a war with two of the worlds largest wheat exporters lobbing missiles at each other nor with social media skewing social attitudes