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Author Topic: Are we in for the next round of financial volatility?  (Read 63734 times)

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Arkane

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Re: Are we in for the next round of financial volatility?
« Reply #15 on: December 09, 2015, 12:56:31 pm »

Azzaaa
Not looking in the wrong place! not actually looking at all!
Just seeing whats happening!

Is there a point in knowing where your house fire started after it is burnt to the ground? no no point at all!

Just vacate early and stand at a safe distance! A deckchair and popcorn is then handy!
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #16 on: December 09, 2015, 05:28:39 pm »

The powers that be have been trying to prevent a crash since 2008 - the fowls eventually come home to roost.
Big junk bond failure yesterday, has  a lot of people concerned: You are not allowed to view links. Register or Login

DoubleLine's Gundlach says 'real carnage' in junk bonds ahead of Fed
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« Last Edit: December 09, 2015, 07:42:56 pm by OzHippy »
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #17 on: December 09, 2015, 08:08:30 pm »

LOL back onto the bond market.  Is it not first economy fails, commodities prices collapse,  then junk bonds, stock markets, company liquidations increase dramatically, banks start failing then country fails (bond).

Right now we are seeing:
  • decade low commodity prices
  • economic retraction and GDP dropping across the glob, retraction in trade and shipping
  • junk bonds yesterday took a major hit (even mainstream media publishing scary articles), junk bond returns have skyrocketed
  • company liquidations in last three months highest since 2008 crash
  • 47 of the 95 biggest stock markets have had more than 10% correction this year so far
  • banks esp European loosing money big time and firing employees (US bank today announced 125,000  retrenchments
  • European central bank just put interest rates further into the negative last week, China has dropped interest rates 6 times this year due to bad economy. China and Russia are pulling money out of US bond markets to sure up their economies like 60Bill a month.  US rates might go up next week!!

The dominoes are falling in the end the countries go broke - a country cant go broke and bonds fail if economy is strong and stocks are good (yes just like the great depression and the 2008 great recession). Gov borrow and get into debt due to week economy and no taxes coming in.  Gov debt is already in a death spiral as it is too big ever to be paid back and the debt is increasing exponentially.
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #18 on: December 09, 2015, 08:42:35 pm »

Azzaaa, The only sign you give on coming bond collapse is when interest rates increase - by then it is all overs and too late to react, you will be swept away from your deck chair into the storm.

Every one I speak to and reports I read agree that it is first deflation then hyperinflation.  The world is currently fighting deflation due to the issues I mentioned in the previous post.  Japan now almost 300% GDP debt fighting deflation the ECB just put rates further into the negative to fight deflation.  US federal reserve is also concerned about deflation but said it is due to low oil prices and will self correct - hahaha.

Lets look at the last failed state where bonds collapsed Argentinian  - economy failed - ran out of cash - no more goods in stores as trading halted and imports failed due to shortage of cash, then currency devaluation and hyperinflation then interest rates are now rising to stabilize the currency.  You are not allowed to view links. Register or Login

I am expecting instant failure once deflation has run it's course in the developed economies and due to interconnections one goes all goes. It will be overnight collapse prior to interest rates getting a chance to rise.  With the US as reserve currency the value of the currency fails catastrophically and the currency does not get a chance to drop while interest rates are raised. 
 
« Last Edit: December 09, 2015, 08:46:25 pm by OzHippy »
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Azzaaa

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Re: Are we in for the next round of financial volatility?
« Reply #19 on: December 09, 2015, 11:16:25 pm »

As I stated a rise in interest rates will be the catalyst for the bond collapse. It starts the the wheels in motion. It in itself will not cause the dominoes falling. The pressure must build until one of those European countries cannot service their debt anymore. When they default that will be the first domino that leads to a full blown sovereign debt crisis just like 1931. As I explained before thats what causes the banking crisis and the seizing up of the financial system that you are concerned about. These events are not upon us yet so thinking that you will wake up tomorrow and see the financial system has melted down is premature.
            The worlds economy contracting is normal. This is how the business cycle functions. It's dynamic. Up, down, up, down. The up is over and its now heading down. Its just time.
              I'm not sure that last statement makes any sense however interest rates will most certainly rise well before the collapse and initially it will contribute to the US dollar rising significantly.
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #20 on: December 10, 2015, 01:00:11 pm »

You say the current commodity price crash is normal together with and the world wide GDP and manufacturing retraction etc..  I don't see it that way - we are currently in the throws of massive world wide recession and the markets are following.
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Azzaaa

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Re: Are we in for the next round of financial volatility?
« Reply #21 on: December 10, 2015, 10:12:26 pm »

If you dont recognize the dynamic nature of commodities, stocks, bonds, interest rates, real estate and the economy as a whole then it's because you are only looking at current trends and have not viewed economic history in enough detail. Your only looking at recent events and not looking at past collapses which is why I've suggested you study the great depression. You will find the same type of events as we are currently seeing. Which why I am saying this is how collapses unfold, it's normal. This is why I keep referring to the bond market because you do not have the full economic meltdown while the safe haven of the bond market is intact. That's why the GFC did not degenerate into a depression, government was ok so capital had somewhere safe to hide until the storm passed. This is why  the depression didn't erupt until 1931 as you can see bonds collapsed as the US dollar skyrocketed.
           Another historical data point that shows how this type of collapse has occurred before is this chart of the Roman silver coinage. You can see the silver content really collapsed around 250AD which is when the Roman government collapsed. This chart proves that the Roman money supply increased dramatically before the collapse just like we are seeing today with QE.
          Furthermore with commodities here are some charts of silver during the 1919 bubble and of gold during the 1980 bubble. And just for good measure here is a long term view of copper. Just look at the 1865 bubble.
          The aspect you need to take away from this is every market you look at is dynamic. They all rise and fall. All economies rise and then fall just like rome and what we are facing has happened before but the full blown crisis and collapse does not occur until the bond market crashes taking government with it. It's just how these things unfold.
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #22 on: December 12, 2015, 11:02:17 am »

This is a post I put up on another forum.
Volatility is rising and fer returned to the markets.  Friday: Europe more than 2% down, heavy weight Germany 2.4%. US ended 1.95% down.

Oil continuing to shock! "US oil settles at $35.62 a barrel, plunges over 10% for week"
Maybe I am doom an gloom but everywhere I turn I see bad indicators.

A major junk bond trader company halted trading and prevented withdrawals. You are not allowed to view links. Register or Login
"Stocks closed out a volatile week with sharp losses Friday as oil hit nearly seven-year lows and news of another corporate merger weighed ahead of the Fed's highly anticipated decision on rates next week. News of a roughly $800 million junk bond fund preventing withdrawals also unnerved markets. "

Stocks Crushed Friday With the S&P 500 Suffering Its Worst Weekly Loss Since August - and 2012. You are not allowed to view links. Register or Login

"So, what triggered this huge selling event on Friday? There will be many opinions as to what caused the selloff, but, China's Central Bank signaled on Friday its intention to loosen Yuan's peg once again to the U.S. dollar. China says it will link the yuan to a basket of currencies. This simply means that China is allied with the Euro and Janet Yellen and the Federal Reserve are on their own if they raise interest rates. In September, Janet Yellen was threatened by the IMF and others not to raise interest rates. This time the threat is coming from China. This may be a possible game-changer for the Fed and it may not raise rates after all."

"In addition, there appears to be the panic in the junk bond market that has finally started to appear on everyone's radar screens. The SPDR Barclays High Yield Bond ETF (JNK) was decimated this week to the tune of down 3.96% and now down 12.74% for 2015. This, coupled with the fact that there is over $9 trillion in dollar denominated emerging market debt and over $5 trillion in energy related debt, you can understand the panic if Yellen raises interest rates."
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #23 on: December 12, 2015, 08:41:09 pm »

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....again hey ... just sayin guys ..
I am interested in the small books you might write in reply to my question ?

To quote the bible "Love of money is root of all evil".
To me looking at current world events, spiritual things like visions, scriptures etc....

Just about every country in the world is up to their eyeballs in debt. In 2007/8 the world was 2 hours away from world banks shutting down.  Not so bad in Australia but US and Europe nearly came undone.  Today the debt and printed money is much worse.

I am expecting imminent failure of the global financial systems - all trading commerce and banking stops. Gov no longer able to pay welfare. Shops raided, looting rioting civil war esp in the US.  The Russia and China take advantage of the chaos and bio-weapons are released and then nukes - Ok you get the picture, keep an eye on the economy as these things will play out rapidly.

Just as an example, one thing that I have discussed a few times on this forum is that Australia only has 2-3 weeks reserve of petrol and I think diesel as well. Most refineries closed and fuel imported from Singapore on just in time bases.  If rumor gets out fuel is not coming due to economy strive in Asian waters - 1-2 days fuel will run out at the pumps.  No trucking Australia shuts down.  Economies and supply systems are globally very interconnected.  This is very real scenarios we are facing and could be weeks or months away - I don;t the global economy can survive more than a year. 

Australia currently borrows huge amount of money monthly to pay gov wages and keep systems going.  Markets fail no money to be borrowed -- eek you get the picture.  It is the most likely SHTF//world as we know it ending event and looks to be around the corner.

My 2c worth, I can be wrong and am usually wrong - watch this space if you are brave, Ignorance is bliss.  Did you enjoy the phD theses it you did keep asking ::).
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Arkane

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Re: Are we in for the next round of financial volatility?
« Reply #24 on: December 12, 2015, 10:46:02 pm »

Australia prints its own money!
.gov can just print more money

but the banks frown on that sort of thing!
because control would then revert back to the .gov from the bankers!

Fark the bankers!!
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OzHippy

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Re: Are we in for the next round of financial volatility?
« Reply #25 on: December 12, 2015, 10:54:05 pm »

When The Music Stops – How America’s Cities May Explode In Violence
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Wen the deflation turns into hyperinflation - printing money has no impact.  Historically no county implementing QE printing has had a good result - it has always ended up in a broke gov with no money to maintain basic services.  It will not be different this time except x 1000 worse as debt is much much worse.
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gregprep

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Re: Are we in for the next round of financial volatility?
« Reply #26 on: December 12, 2015, 10:59:09 pm »

Azzaaa, you said on 9th Dec "The first domino is a European government default not the stockmarket crashing."
Do you have any tips on which European government will most likely default and when it may happen?

I see you also believe the bond market crashing is the real indicator of serious problems. For a dummy like me can you explain two things:
(1) what does crash mean? (For example, is it a reduction in bond rates by a certain amount in a certain time frame?)
(2) what indicator can I follow that would give me a meaningful heads ups to a bond rate crash?

Re bond rates here in Australia, this is what I look at from time to time..
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Is this a good indicator?
Appreciate your insights.
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Azzaaa

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Re: Are we in for the next round of financial volatility?
« Reply #27 on: December 12, 2015, 11:07:57 pm »

Sorry for doing your head in! But I will have to pull you up about exactly what we are debating here. We are discussing markets, how they move and historically how they have reacted during periods like the great depression.
           By the sound of it you have not really studied monetary history or really thought about why money exists and just consider it evil. It forms an essential part of society and should not be considered bad as like most things it's the human element that causes the problem.
            Money is actually a language that humans use to express value. Without it we are back at a barter economy which obviously has it's problems, so we invented it to facilitate trade. It is an invention of the human mind just like the Internet it is just communication.
             Money naturally rises and falls in value with the business cycle. When assets are rising during the boom moneys value falls and when the bust/recession comes then it's value rises as assets fall. The bonds that we have been discussing are essentially cash that pays interest. Bonds are money. When assets are falling and the panic sets in large fund managers run to bonds instead of cash.
           Almost everyone spends most of their time going to work. Why? To earn money to provide for themselves and their families. You may as well understand what it is and what it's opposite is being assets. You are better off controlling it than having it controlling you. But that takes financial education which is something most are not willing to do.
          Above and beyond all of that is the requirement to survive what is coming and protect yourself and your family. If you understand what money is and how it's value will skyrocket as the bond market collapses then not only will you survive then you will also be able to help those in need.
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Azzaaa

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Re: Are we in for the next round of financial volatility?
« Reply #28 on: December 13, 2015, 12:17:22 am »

I keep an eye on the bond market on You are not allowed to view links. Register or Login. You can look at every sovereign bond market in the world and see the yield on every duration  (overnight to 50years). When you look at the European countries you will be shocked at the negative interest rates these bonds are paying. Switzerland is the most insane where the 10 year bond has a interest rate of -0.2%. Can you imagine committing to a 10 year investment where you lost 0.2% every year.
        Bonds are sold at auction with a fixed interest rate  (called the coupon). Say for example 3%. As the auction proceeds if the price is bid up (like a real estate auction) then the effective interest rate or yield goes down. In the case of these European countries the price has been bid up so high that the effective interest rate has gone negative. This is why I have been saying that bonds are in a bubble. The prices are so high. This is the real reason interest rates are at 5000 year lows. You have to realize that the bond market is at least 3 times the size of the stockmarket. Thats a big reason why there is no economic growth. There is so much money parked in bonds  (cash that pays interest) scared to death not knowing what to do.
          A bond market crash is in reality rising interest rates. Which means bond prices are falling. Each country pays a different interest rate dependent on those auctions. Lots of confidence and the market will drive down the interest rate. No confidence and the market will drive the interest rate up such as what happened to Greece. Over 20%.
           This is the element that very few understand. The central bank does not control long term interest rates. The market does. And when everyone starts to realize this during the panic is when the SHTF.
           If you watch closely you will see how the stockmarket and the bond market are actually opposites. When stocks are rising bonds will fall (rising yields). This is why watching the stockmarket as an indicator for the economic collapse will be misleading. The real crisis is in the bond market. You will know the crisis is in motion because interest rates AND the stockmarket will be rising. The money parked in the bond market will be looking for the exit and it will find it's way into the stockmarket.
            The country most likely to default first is likely to be Greece. Notice how civil unrest has reared again. This politically is what can force the default. When the citizens revolt from the insane austerity. They eventually stand up and say no more!
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Arkane

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Re: Are we in for the next round of financial volatility?
« Reply #29 on: December 13, 2015, 12:28:11 am »

Azzaaa

It sounds as if money is a religion to you! and you consider it a god itself!

When one elevates money to god status it enslaves one!

The people should be in charge of ones countries finances not faceless nameless shadows! or any private bank federal reserve on not!

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