Re: Free fallin'


"Renli" <usagi.meijin@xxxxxxxxx> wrote in message
news:f68848c4-3b4f-4b8c-99f9-12c2f0b063f9@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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So while looking at the dow by itself, we see that you are right, at
least on the surface.

Now let's take a look at the big picture.
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Hmm seems everywhere we look the crash of 1987 was worse.

In 1987, the crash was linked to Japanese investors refusing to invest
in US bonds/treasuries/whatever *at the current rates*.
In 2007, the crash is being linked to investors - everywhere -
refusing to invest in US bonds/treasuries and all derivatives at ANY
rate.

Well this is different. So the prognosis is worse. The problem here,
the real difference, is that the source of the problem isn't going to
go away, Peter. It's going to get worse. People aren't just "not
investing" they're SELLING treasuries. The dollar is ALREADY much
lower than it was in 1987. The safety net is gone. Home prices are
falling and not rising. There are no bubbles left top inflate that I
can see.

The 'bubbles' are the thousands of sme's and individuals who borrowed and
couldn't repay debt secured by assets with falling values. There will be some
great US residential property buying opportunities in the next few years.

Not according to "The Worst market Crisis in 60 Years", by George
Soros
(see:http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658,dwp_uu...)

By any demonstrable test, 1987 was worse. What *might* happen in the
future is a different matter.

But that's precisely what I am talking about. The reason why we're
nearly crashing (14% in OND for 2007 vs 33% in 1987).. the
fundamentals.. are much worse.

Well no they're not. Corporate profitability is much higher and PE's more
rational than they were in 1987. Capital markets are generally more sophisicated
and better informed than they were 20+ years ago.

There's a huge industrialization going on outside of the USA, and if the US gets
smart enough, it will take advantage of this opportunity and sell to China, India
and other high-growth economies. If it doesn't, then perhaps the US economy does
fail miserably. That won't damage the world's economies the way it did almost 100
years ago...and it's unlikely to improve your canned tuna odds.

The reason why we didn't crash worse than 1987 is because the fed is
more experienced and knows how to soften it up.

Uh, sort of...

But Peter, by all
accounts, the fed is part of the problem and not the solution.

So dump the Fed? Is that your solution?

Meaning, they *shouldn't* be bailing out banks or the stock market.

Sometimes it makes sense to bail out a bank...most times it doesn't. Picking
which is which is the tricky part.

Do
you realise that a lot of the old money out there is leftover toxic
waste from... you guessed it, LTCM... the asian currency crisis.. and
1987.. and even before?

This is the sasquatch of the financial world....

Toxic *** that burns holes in bank balance
sheets? But Peter there is NOWHERE left for this hot money to go. And
the *fundamentals* are not sentiment this time. They're hardcore
numbers which extend until 2012. We're in for a wild ride. This is the
tip of the iceberg. 14% in 2007 is not 33% in 1987 - yes.

The cash-flow effect of these events has long since passed. If they punch holes
in
balance sheets, that affects the share price, not the cash flow, which is a more
sensible solvency test.

But 14% in 2007, 10% last week, 12% next month, 14% again by the end
of the year, 8% in 2009, 15% in 2010, 3% in 2011, 19% in 2012.. Down
down down.. the fundamentals are whispering to you peter. Can you hear
them?

You heard them and they told you to buy canned tuna?

or for a nice picture of the
man,http://www.thefirstpost.co.uk/people,601,soros-predicts-worst-recessi...

Yes, yes...Soros *predicts*. TODAY"S reality is not tomorrow's
prediction.

Why does he believe so?

Ask him.

...and not according to my own calculations as well.

Well that seals it, eh?

Pretty much. I've given you enough information to draw your own
conclusions.

You have predictions, Oliver.

What we are seeing now Peter,
even in Australia.. is the tip of the iceberg.

Bull***.

I'd like to hear your explanation why.

There is no 'iceberg' upon which Australia is the tip, Oliver, at least not the
catastrophic one you envisage.


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The USD is at all-time lows. We're seeing a reversal of 50 60 and 70
year trends all accross the board: mortgage approvals, defaults/
foreclosures, home prices, rates, the gold price, the fundamentals are
shockingly similar to the early 1900s and even before in the 1800's
with war funding and inflation, "not worth a continental" you could
say it's "very well charted territory" if you've read Rothbard's
"Histoy of Money and Banking in the United States". The problem is
that no one is alive to remember what happened. Thats part of the
reason why 1987 happened, the generation of the great depression
started retiring or dying off. And now they're gone and the corporate
lifespan of million dollar a year ceos is only a few years so I doubt
too many people even remember back as far as 1987. Or even 97.

So all things considered I think we're in uncharted territory
everywhere except possibly the price of gold and silver, that and the
funamentals and trends are operating like 1927 or 1987 atm...

Is your argument falsifiable? At what point in the future, if your predictions do
not come to pass, do you concede that it ain't gonna happen? Or is it like Jesus'
return?

It's not going to be the end of the
world but (for example) you can bet it will be the end of Australia
controlling the supply of it's natural resources.

Nah...we've got CENTURIES of raw materials at our disposal.

I know, but you will no longer be in charge of distribution.

Says f#$@&! who?

Australians are already complaining about unfair trade practices with
China.

They've been complaining about us putting prices up. Our trade surpluses continue
unabated.

Australian companies can't get directly involved with China

How's that??!!

however China is starting to buy up control of supply lines and
production out of Australian hands.

Which Chinese firms have done this, in which industries?

It is a trend you see everywhere;
soverign wealth funds are buying up the western world.

They serve a valid role in world capital markets.

Then consider it a hedge against inflation. Consider it "tuna can
futures". Consider it a form of derivatives insurance.

It's called a 'natural hedge'.

Thanks.

You're welcome.

I'm starting somewhat late considered to what I could have been doing.
However. I still have just enough time that $1000 or $2000 a year over
the next few years makes a very large (very large) difference at
retirement.

Nope. Do the math.

$1000 invested at 16% over $20,000.

Term? How are you compounding, and how frequently?

I am projecting an average annual return of 20% per year and I've done
better than that historically. That makes $1000 into $65k.

That's some curious assumptions.

And realistically I'm going to be doing this well into my sixties.
thats 30 years from now. So $1000 now is $300k+ when I retire.

You need to be more conservative with your rate of return.....really.

So I am just sitting here with a calculator..

Go buy an HP12C, learn how to use it, what all the buttons mean etc.

calculate if I save $25
bucks week and only achieve half my goals i'll still be a
multimillionaire when I retire.

You have to index your rate of return. Being a multi-millionaire is only special
when everyone else isn't one too.

And I'm not too worried about
inflation because I take profits into physical commodities like gold
or silver.

That remains to be seen.

Now how much do you think I'm *really* saving each week?

Dunno.

It's a pretty standard story really.

Yes, I'm afraid it is....

It's just that because I am still
relatively young, a thousand dollars is a huge difference.

Perhaps.

Compound
interest can be fascinating.

Really? <snicker>

Did you know that if you had put just $5
a week into a s&p index college fund in 1990 your child would have
$25,000 today? And thats just five bucks.

<stifled guffaw> ....I gotta have a long talk with you, Oliver....

And you have other factors to consider. Consider that I live in
earthquake and tsunami and typhoon country. Natural disasters are
commonplace here. People here keep bottles of water next to their bed
incase their house collapses and no one can get to them for qa couple
of days.

What will you do with the cans when a tsunami hits?

I'm hoping they'll weigh the house down enough to keep us stable.

2 points!

We've been devising battle plans and installing habitrail tubes to
rapidly coordinate the movement of cans from one end of the house to
the other in the event the wind suddenly changes direction.

LOL!! 3 points!!!!

Of course, the houses in my neighborhood are earthquake-proof
and have been standing for 30 years.

So why mention earthquakes?

Because you never know.

A very long talk....

But there could always be a big
one. Just saying. And heck I'm gonna eat it anyways...

Perhaps you should have bought hundreds of rolls of toilet
paper...you're going to be using them anyways...

It's very bulky :/ But as you've figured out by not I'm not really
preparing for a war or armageddon.

Just as well. Armageddon probably won't start until after 2010 anyways....

Although if the US tanks and experienced a military decline you can
bet china would invade Taiwan.

I doubt it.

50% of its purchasing power since when? 50% relative to what?

Relative to itself. I.E. if something cost a dollar 3 or 4 years ago,
it now must cost $1.50.

No indexing?

sure consider oil and gas and gold and wheat and corn and it's like
50% in 2007 alone.

No, no.....

This means if you earn 20-25% interest you're
just keeping pace.

Really? Gee, to think of all those years I spent studying
economics...and instead I could have just come here and 'learned' from
you.

I don't get it Peter. You spent so long studying economics but you
aren't immediately aware of what the real inflation rates are in the
USA?

You think the inflation rate in the USA was 50% in 2007 and you want to see MY
transcript? LOFL!!!!

Take a look at gasoline and gold. Gasoline is up
but not compared to gold. See the 3 year charts for $WTIC:$USD and
$WTIC:$GOLD. Gold is affected by inflation about the same as oil is; 3
years ago the average gas price in gold is nearly exactly the same as
it is today.

But in US dollars gasoline is 100% more expensive. This is a pretty
much accross the board observation, most commodities like oil and food
are 50-100% more expensive than it was 3 or 4 years ago... thats why
there are riots in mexico over corn for tortillas and in italy for
wheat...

This is all laughable bull***. You're a poorly performed amateur
investor with an Armageddon complex.

There is no way to deny that if you had placed $1000 dollars into a
bank account at the start of 2007 that thousand dollars would buy 30%
less of anything - food, oil, gold, whatever. It's a fact, Peter.

You mean US dollars spent in the US? You're over generalizing here, there are
many clear exceptions.

The
only laughable thing is the interest rate the banks are paying.

Uh?? Nice non sequitur.

Your selective use of 'sources' to support your Doomsday watch is very
unimpressive.

I'd like to see your sources. You seem to be saying that I don't know
what I am talking about but so far your only "evidence" is an appeal
to authority that you have studied economics. So what? Where's the
beef, Peter?

I'm not making claims or predictions, Ollie, so there's no onus on me to produce
cites.

When you say "1000 dollars into a bank account at the start of 2007 that thousand
dollars would buy 30% less of anything - food, oil, gold, whatever.." then it's
YOU that has come up with the cites.

As regards appeal to authority, you're simply mis-using the term. I'm trying to
be nice to you here...really I am, but you're pushing me to rub your nose in it.
Again.

You've been spruiking this 'the sky is falling' bull*** for ages now,
and the window of catastrophe just keeps moving ever forward...

Not really. Everything I have predicted has so far come true. And
given it's inerta there is no reason for you to believe the clouds
will suddenly part tomorrow.

If you really think the sky is going to fall, the strategies you need
to adopt involve making yourself as debt-free as possible, just for a
start. Buying cans of tuna is not conducive to this approach.

Actually paying off debts (government debts, credit card, mortgage
debts) *early* is the LAST thing you want to do in a hyperinflationary
scenario.

So is THIS what you're predicting....hyperinflation in the US? Kinda wipes out
your tuna profit, eh? You're all over the shop with this. Sincerely.

Under all but the most catastrophic economic conditions, eliminating
non-deductable, high-interest debt (for many, their credit card) should be a very
high priority. You'd be hard pressed to find ANY personal financial advisor NOT
providing this advice, EVER.

You studied economics? You sure? Are you aware that if the value of
dollars tanked compared to commodities, anyone who paid off their
debts before investing into commodities lost out big time?

OK....I've had enough....

You keep saying "Am I aware..?" and expecting me to go "Oh wow!" over the
effects of compound interest. You *REALLY* want to discuss the time-value of
money with me? Are you fucking serious??

When you can say that you fully understand the meaning of terms such as present
value, future value, discount rate, irr and mirr, rests and compounding periods,
we can talk a little more.

That's first chapter, Capital Budgeting 101. You wanna talk some more financial
mathematics?

Then you can plot me a cash-flow time-line with all attendant conventions for an
array I'll provide, then write me a 500 word essay on the following;

"Irr as measure for investment success only takes into account capital tied-up in
the investment, while free capital remains unconsidered."

I'm a tough marker, so don't say you weren't warned.

So let's say we do this every day (the work gets harder and requires pretty sound
numeracy skills) for a year or so. Then I might take you on as a student.
Seriously.

I'm not
saying don't pay your debts - only el queso was dumb enough to say I
don't pay debts - I am just saying that making yourself as debt free
as possible isn't what you should do.

Ah, you're changing your stance, if ever so slightly, but significantly. Debt
that you use to create higher-than inflation net returns is just fine, provided a
few other simple rules are applied.

You should invest in commodities
with credit as much as possible.

If you know what you're doing and have sufficient assets to cover margin calls.

In 2006 I borrowed $6,500 at 20% (not compounded but on the principal
only). I invested it into gold. Why I invested it into gold I don't
know, I wasn't aware of the fundamentals back then. But I did. I also
added to my oil stocks (like IMO which I told you about before).

The money I made - and I did make money - (gold:usd is 2x what it was
or 100% gain) is FREE. FREE money. Now I'm paying off my debt and I'm
keeping the *profits*.

If I had paid off my debt I would not have made that money in
commodities.

Good luck with this as a long-term strategy.

Yes it was a risk. But it was a risk that paid off because of
inflation.

My advice is get the hell out of the third-world economy you are in
and move to a place with a strong economy with trade surpluses with
countries like China.

What is your total cost of living compared to total income?
i.e. what is your net income as a percentage of your total income?

How often do you have sex with your wife? Discuss.

In order to enjoy the same standard of living I am enjoying now, in
Canada, I would have to have been making $65 or $75k US. I'm about to
double my income by taking another part time job in the mornings or
afternoons. Leave all this?

Yeah...in a hurry, preferably.

The only reason why I would do so is if
China invaded taiwan and the US/Europe tanked to the dark ages and no
one wanted to learn english anymore.

None of this is gonna happen any time soon....

And by the time that happens I'll be living like a king in patagonia.

Yes, of course you will. They all eat canned tuna and creamed corn in Patagonia.

Especially the king.

--
GDS

"Let's roll!"



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