Foreseeing and preparing for the next fiscal meltdown. [Archive]

Baa_Baa

14-04-2015, 08:40 PM

Post 1.

Imho, Greece get the money because they threaten to default, not because some ungraciously call them unproductive sloths, nor even whether they can repay. This threatens the Euro fiat currency experiment, of destroying in a cascade of relative productivity from weakest to strongest, the European nations house of cards, until one or none are left standing.

But it's not better in the USA, or South America, or northern Asia, or Oz, or or or, not even here in NZ or countless other sovereign nations. Where unprecedented escalating sovereign debt and printing treasury bonds to generate liquidity from equally indebted sovereign nations, has become the panacea for national and global fiscal liquidity and to heck with the end-game.

Should we worry? It's all that sloshy debt sourced capital that underpins sovereign nations ability to continue to invest heavily and constantly where wealth is ultimately accumulated perversely in banks that cannot lend enough of it out. And the fortunate few who accumulate enough capital to participate in wealth creating markets, albeit the wealth denominated in flawed fiat currencies underpinned with extraordinary sovereign debt. Lord help the indebted and the taxpayer who are propping all of this up, albeit unwittingly.

The second best evidence of impending fiscal calamity aside from monumental escalating sovereign debt is global sovereign competitive currency debasement, which is moving into full swing right now. And on the end of that whipping hose is NZ with it's soaring currency, for no good reason, certainly not an ability to foot it on the global fiscal stage. We don't have a QE machine working overtime, nor a balance sheet to create enduring increasing debt (bonds), nor the cash to manipulate our currency position, nor a surplus to pay our sovereign debt while meeting expenses, nor an economy productive enough to build sufficient surplus, nor an angel nation that we can fiscally threaten so that they float us for eternity.

The whole world is financially in a terrible mess, and we may be too. It would be great to see discussion about how that affects NZ and what if anything can be done about it, like if there is an immunity pill for NZ, where do we get it or how do we create it, and when do we take it so that NZ fiscally survives the next and inevitable global fiscal meltdown?

BAA

Baa_Baa

14-04-2015, 08:42 PM

Post 2.

It's easier to keep ones head in the sand and mock those who dare to raise that the world is not all fiscal peaches and cream, than have considered discussion on rationale responses to an inevitable downturn, for whatever reason it occurs. The 'Investment Strategies' might be better place for the discussion, I agree it is not well placed here.

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by BIRMANBOY http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=567692#post567692)
if you change your avatar to an angel and your name to "WhitePeter" you may not need to. There seemed to be an inordinate number of conspiracy theorists, survivalists, bunker nuts and assorted "oh whoa is me's" on the Gold thread..however the only traffic there was going in circles, so dunno. How about a nice walk outside?:)

Baa_Baa

14-04-2015, 08:43 PM

Post 3.

Good point, though my suggestion to discuss it is not about changing the world, it's about what we, you or I do, as individuals (many with associated responsibilities and dependents), otherwise I agree it is a waste of time trying to change the macro economics. So few saw the previous fiscal liquidity/debt burdens relationship to the market crashes that came about I thought it might be helpful to point out that if anything, global liquidity underpinned by unsustainable and potentially un-repayable sovereign, business and personal debt, has increased umpteen-fold (since even the last crash) and so with it comes the greed and risk taking, which pre-cursors market failures. If we don't or won't consider that, or the personal consequences of ignorance, are we not neglecting our personal responsibility to protect our own meagre place in it?

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by BIRMANBOY http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=567722#post567722)
If you could actually accomplish anything or implement changes then I might bother being interested....until then...its all a waste of time. However by all means don't let me stop you.:sleep:

Baa_Baa

14-04-2015, 08:52 PM

Post 4.

If that is so, why are stock markets around the world hitting all time highs?

It's about liquidity Onion, and what generates that money, and where it eventually ends up, because it has to go somewhere, so the stock markets are just one of the logical destinations.

The point though is by who, how and even is it possible, to repay the sovereign debts that underpin the liquidity, granted by the government and guaranteed by the tax payer, and what can you or I do about foreseeing this and protecting ourselves from the inevitable next rout?

As an aside, the trigger for the recent meltdown (but not the root cause of the problem) was pure greed, by previously respected financial institutions, who lent money beyond the ability of the debtor to repay, who then sold the loan books to the suckers who eventually realised they weren't going to be repaid. Then the house of cards came down and it rippled around the world, including NZ where the NZX dumped. Not quickly like '87, but fast enough to catch many out.

Today there is substantially, even inconceivably more global liquidity, underpinned by sovereign debt, sloshing around the world, including in NZ, making the haves feel happy, and the risk takers less worried and the greedy more emboldened.

The cycle continues. Are we even interested to consider whether it's a problem or whether we as individuals can do anything about it, like foreseeing it and preparing ourselves in advance?

BAA

Baa_Baa

14-04-2015, 08:54 PM

Post 5, and last to start the thread.

Well yes, meagre in the scheme of things, but that's all I have, and it's worth protecting. I thought that given a conversation about Greece's problems, that maybe we could sheet it home to something a bit more real. I'll start a thread in the Investment Strategies and post copies of my recent comments.

Meagre are you?? Ok I am now channelling Yoda..so bear with me.... If you want to start a thread...how about
NON-Investment strategies, because that's what that leads to. It means you consider withdrawing from mainstream investing and focus instead on protecting what you have. Problem is of course where do you draw the line...banks fail..better withdraw funds and bury gold bars in the back garden, stock markets collapse so you better cash up and ...and....and...what...? Dwelling on and planning for unknown and possibly unlikely scenarios is all well and good if you know when and how. Either you have an optimistic outlook and believe that the basically intelligent animal that we are will find a way through the difficulties, (as we do and have been doing for centuries), or you start gnawing on your fingernails and start looking for the signs of imminent financial disaster. Up to the individual of course however if you feel strongly maybe start a new thread over in the Investment Strategies.

BIRMANBOY

14-04-2015, 09:03 PM

Ok to help the discussion along, here are a few thoughts. Finding answers and solutions are much easier if the problems are identified and quantified so how do you see the Greek financial situation impacting on us here in New Zealand? If you try and understand the complexity of the Greek/German/European situation you will be over your head, no disrespect intended, since the most financially astute and experienced have been trying to figure it out for years. if you bring it closer to NZ you may be able to see some clarity. Basically what you are trying to figure out is "how will NZ be impacted" and then "how will that impact on me"? Personally, not being an economist, or a Govt. forecast specialist, I have no idea but one would expect there to be the phrases, balance of payments, dairy exports, energy imports, unemployment statistics and national growth sprinkled into the discussion. Too many variables for me to even get my head around the possibilities. How would you protect your assets?

Baa_Baa

14-04-2015, 09:53 PM

Great summary.

I think firstly we have to accept that there is a global fiscal problem, which is getting worse not better, and that we in NZ are already victims to its effect. For example our currency inflation is illustrative of nations exporting their deflation, hindering our ability to be competitive in global markets. That's just one example.

I don't think Greece is helpful except as an observation that even the most indebted nations can avoid repaying sovereign debt by exploiting the taxpayer and in their case angel nations who cannot afford to have a fiat currency collapse. It is sideshow though informative, you don't have to be an economist to observe the fiscal dysfunction all around us.

We could insert here a rant about the USD, the global reserve currency, it's inconceivable devaluation from inception to now, and the emergence of new super economies etc. But save that for later if we need to.

We could also talk about intrinsic value, like accumulating precious metals as a store of value, to insure against and overcome the inevitable demise of global fiat reserve currencies. But again let's save that for later if we need to.

So to home and real life, some are fortunate to have accumulated wealth and participate in appreciating instruments of cash, bond repayments, equities and property -mainly. Wealth is relative though, it really doesn't matter how much more you've got than you need to exist, as a relative percentage of what each of us have, it's worth protecting. We have seen a number of times how vulnerable our wealth is, to domestic effects and international.

At a personal level, if one accepts there are risks that we cannot change, I think we have three responses:

1. Keep an eye on the macro events that foretell of impending problems. Like for example excess liquidity on a grand scale, unredeemable debt etc. But domestically, sloshy money looking for a home, in higher risk ventures like loan sharks, P2P lending, crowdsourcing, and even equities that rise well above fair value, property prices that exceed rationale explanation, debt instruments at all time low repayment levels, cash that is worth nothing after tax ... and so on. Look for opportunities for fraud as well, where the story is too good to be true (a big lesson from the last fall out). Point being when and how is it likely to all implode, and why.

2. Ride the waves of growth that are within our individual and manageable risk tolerances. There's no harm in being on board a growth instrument as long as we know how to get off. More of that shortly. The point here is being realistic about risk, and being invested in only the things that we are comfortable with and prepared to monitor closely. I see no place for passive investment strategies, or higher than individually acceptable risk taking, in an overall risky fiscal economic environment.

3. Knowing how to get out, quickly. For example in equities it may be simply about tightly setting and closely managing stop losses, letting the market take you out when your threshold of pain is hit. In cash it's about picking the bank you think is least likely to fold, or storing some out of the banking system just in case. In bonds and property you're basically stuffed, there's no quick way out.

So there's some thoughts to get a discussion going. Do we accept that the world has gone mad and is even more insane fiscally than the last time it dealt to NZ, and do we have sensible responses to an event if and when it happens.

Keen to hear peoples thoughts.

BAA

Ok to help the discussion along, here are a few thoughts. Finding answers and solutions are much easier if the problems are identified and quantified so how do you see the Greek financial situation impacting on us here in New Zealand? If you try and understand the complexity of the Greek/German/European situation you will be over your head, no disrespect intended, since the most financially astute and experienced have been trying to figure it out for years. if you bring it closer to NZ you may be able to see some clarity. Basically what you are trying to figure out is "how will NZ be impacted" and then "how will that impact on me"? Personally, not being an economist, or a Govt. forecast specialist, I have no idea but one would expect there to be the phrases, balance of payments, dairy exports, energy imports, unemployment statistics and national growth sprinkled into the discussion. Too many variables for me to even get my head around the possibilities. How would you protect your assets?

winner69

15-04-2015, 07:13 AM

An inverted yield curve is generally not good news, a bearish outlook toward the future direction of the economy.

Check out the latest swap rates ....yield curve looking ugly

Bugger

winner69

15-04-2015, 07:17 AM

We are doomed

http://www.radionz.co.nz/audio/player/20174756

ECB mistakes will cause another financial crisis - economist

BIRMANBOY

15-04-2015, 08:51 AM

W69,Since you have renamed as "insolvency specialist", you should be guaranteed future income....oh wait...they are insolvent so lets rethink that.:p Doomed eh? the more you read articles and listen to experts, the bigger the fear. Forget the fear and get on with your life. Fear, strife and disorder sell newspapers and pay for experts BMW's. I have a Yaris so am not worried at all.
We are doomed

http://www.radionz.co.nz/audio/player/20174756

ECB mistakes will cause another financial crisis - economist

winner69

15-04-2015, 09:08 AM

Birman, I got pissed with somebody saying I didn't deserve to be a Legend so changed it. Fair enough but the new one was stupid.

its BaaBaa who thinks the world is going to end. Thought he needed that man to reaffirm his fears.

you and I have seen it all before eh. Plenty of bargains in the wash u for the survivors like us.

lovely sunny morning here. Done my 5k around the coast and feed the cats so will enjoy the rest of the day. Might wander up to the coffee shop to see whose there, might even catch up with my mate Des

you enjoy your day as well mate

winner69

15-04-2015, 09:22 AM

I have a Yaris so am not worried at all.

Nice. What colour?

Wife has a fluoro green Swift for whizzing around town

Big flash cars are the scourge of the world, a symbol of what's wrong with the world today. OMG what have I said.

Baa_Baa

15-04-2015, 09:31 AM

Thanks Winner69, good to have you join the discussion.

Although the world is unlikely to end because of a financial crisis, and few would believe it will, you have generously shared by inference that global fiscal uncertainty is not something be fearful of when one is skilled enough to identify the bargains, and fortunate enough to have the experience that ensures [fiscal] survival.

It would be great to hear more from you on those things; managing fear, fiscal survival (say capital preservation), identifying bargains.

:) BAA

...snip
its BaaBaa who thinks the world is going to end. Thought he needed that man to reaffirm his fears.

you and I have seen it all before eh. Plenty of bargains in the wash u for the survivors like us.
.. end snip

BlackPeter

15-04-2015, 10:16 AM

Thanks Baa_Baa for setting up this thread ... and no, winner & co - I don't think this is about the end of the financial world as we know it. I agree that humans are as a kind quite able to survive catastrophes, it is only individuals who tend to go down.

Just taking some examples: World didn't end after the Dutch 1637 tulip mania, world didn't end after the 1929 stock market crash, and (as we all know) world didn't end after the 2008 GFC either. However - in each of these financial crashes did lots of people lose their last penny (or whatever the currency of the day) and some even ended their life just due to losing their money. For these individuals (and for their families) actually the world did end / or break down.

So - I would see this thread as an opportunity to discuss financial safe guards to reduce the impact of such events. If you look for examples in other areas: The use of cars is dangerous and tends to kill some hundred people a year only in NZ. This doesn't mean that people stop driving (and nor should they stop investing), but they do take some precautions. Most got to use a safety belt while driving, modern cars feature air bags and other safety features. Ridiculous - isn't it, given that most people have most days no accident at all ... or maybe just sensible?

I think this thread could be a good opportunity to talk about "financial safety belts and airbags". A discussion about that seems to make sense, even if most of us don't expect to be involved in a serious accident anytime soon (but hey - it can happen).

I think as well that this thread is a great opportunity to talk about indications for financial crashes in the wings. And if you allow me to go back to the car example. Even if it is nearly impossible to predict with certainty the next car accident (same with financial crashes), you can predict that a group of 18 to 20 year old heavily intoxicated males behind the steering wheels of their boy racer cars on a Saturday night are much more likely to cause an accident over the next year or so than a group of 35 year old non drinking females. So - why wouldn't it make sense to identify these risk prone drivers ... as well as risk prone financial situations (in order to avoid them)?

BlackPeter

15-04-2015, 10:53 AM

Now - lets look into one IMHO quite significant risk areas for another financial crash (whenever it might happen):

Many countries these days are piling up debts without any intentions (and / or realistic ability) to ever pay this money back. Question is - how will this trend develop? We do see at current the odd country going bankrupt (they have other names for it ... haircut on debts): from the more recent history names like Russia, Argentina and Greece spring to mind (and Iceland closely avoiding bankruptcy in 2008) - and actually some of them might be in the starting blocks to give their creditors the next "hair cut". Not sure either regarding a number of developing countries (it sounds China has problems to get the money back they did lend to various Pacific and African countries) and not sure about many other African countries either (Zimbabwe bonds, anybody?).

What we didn't discuss so far are the elephants in the room. Neither the United States nor Europe are likely to ever repay their current fiscal debts - and, while most of these countries are currently able to serve the interest they owe, this will change as soon as interest rates rise. Might be an interesting discussion how markets will react when the first hair cuts for US bonds are announced.

And again - it will not be the end of the financial world (no money devaluation so far has been), but it will mean a lot of problems for a lot of people. And the risk for the next financial crash being close (months or small number of years) is in my view similar to the risk of a group of drink driving boy racers to cause a serious accident over the same period of time.

Historically it was normally good and productive companies which recovered first, while money in the bank and bonds often have been lost for ever after a financial crash. Though, this is not always true. If you look at the recent GFC, than people with (good quality) bonds had after 5 years (2007 to 2012) more money in the kitty (average gain of some 4 to 5% annually during this phase), while people fully invested in stocks ended in average just back where they started in 2007. Obviously - the people who put their trust into Bridgecorp, Money managers & Co ended often up with a nice round number - ZERO.

My strategy so far is to keep most of our money (but the supply for a couple of years) in (still reasonably priced) stocks, to diversify not just across industries but as well geographically, and I bought into some gold stocks (well, miners - not that fond off holding the yellow metal myself). Ah yes - and I never trust people asking for my money and promising huge returns ...

percy

15-04-2015, 04:46 PM

I am pleased we have this thread.
Like BlackPeter I am well aware that stocks with a strong balance sheet, and a capacity to pay increasing dividends,quickly recovered from GFC.
I also have very diverse holdings.Maybe I have got it a little wrong selling down my Aussie stocks and reinvesting in NZ stocks,but I am more comfortable with NZ Ltd's prospects, than overseas,and I am enjoying the imputated dividends. I have also added agriculture stocks to my portfolio.
I like a lot of NZ sectors;medical,retirement,agriculture,banking and finance, tourism,utilities and service.

BlackPeter

16-04-2015, 08:44 AM

sort of relevant article in today's financial times:
http://www.ft.com/intl/cms/s/0/2476978a-e2e8-11e4-aa1d-00144feab7de.html?ftcamp=crm/email/2015415/nbe/WorldNews/product#axzz3XPbv82Ri

This time it is not some funny internet celebrity rising concerns, it is the IMF!

Article points to
- risk of ongoing low interest rate environment (in case Fed does not move) to a number of European life insurance companies, who used to guarantee minimum returns which are now not sustainable. Any yes, if companies like e.g. the German Allianz would crash - this would make the 2008 GFC look quite pale in comparison ...
- risk of rate rises to emerging countries (with high US$ debts) - in case the Fed does move ... just imagine not one Greece, but dozens of them at the same time ...

Sounds like they (the Fed) are (at least in the short term) doomed if they move and doomed if they don't. We live in interesting times!

However - the article ends with an sort of optimistic outlook:

"While the stability report flagged risks looming in the financial sector, the IMF’s economic forecasting wing had a more optimistic take on the outlook. Releasing growth forecasts on Tuesday, Olivier Blanchard, the IMF chief economist, said: “I sense the macro risks are smaller than in October — there is no reason for doom and gloom.”

Baa_Baa

16-04-2015, 11:36 AM

The Federal Reserve Economic Data (FRED) is an informative source of all sorts of global economic data, including NZ. Take a look around, you may be surprised at the wealth of information available. http://research.stlouisfed.org/fred2/categories

Here's the FRED chart for M3 for NZ. http://research.stlouisfed.org/fred2/categories/32338 "The M3 classification is the broadest measure of an economy's money supply" (Investopedia). As you can see there's a lot of money sloshing around and it's increasing every year. Have a look at the big global economies though, there's some eye watering numbers.
7276

Where's the money coming from? Certainly not entirely from surplus domestic productivity or exports, so NZ is a net borrower year on year. Another very useful data source is our own RBNZ. http://www.rbnz.govt.nz/statistics/key_graphs/current_account/
7277

But by contrast, if the US money supply is increasing, which is is similar to the NZ M3 as the top chart shows, but of course in USD Trillions not NZ billions take a look at the US Debt! http://research.stlouisfed.org/fred2/series/GFDEBTN You can see why people might wonder how and who can possibly ever repay it? Especially when the US has been running in deficit for about 40 years, so it is a net borrower, but also has a special role as the USD is the Global Reserve Currency.
7278
7279

So where's it all heading? Who knows, should we care, does it matter?

BAA

percy

16-04-2015, 03:09 PM

[QUOTE=Baa_Baa;568004

So where's it all heading? Who knows, should we care, does it matter?

BAA[/QUOTE]
I guess we should,it does matter,but nobody knows..
I believe the futures market trades about 10 times the actual world trade figure.Puts,calls,margin lending,off balance borrowings means to me no one would know total liabilities.
To try and figure all of the world economy is well beyond my brain power.
I therefore try to look for simple indicators;
Ageing population means medical and retirement sectors will do well.
Growing Asian wealth will drive up demand for NZ agriculture products.
NZ economy doing well will drive demand for Bank and Finance company products.
Internet spending will grow web page designers,fast transport [courier] services.
Larger ships will demand fast turnaround and hubs.ie Port of Tauranga.

Baa_Baa

16-04-2015, 03:37 PM

I tried googling 'debt is the new currency' to see what comes up.

One of the things that does is http://www.positivemoney.org.nz which gets right to the heart of how the banks create money outside of the reserve banking system, and the role of banking in feeding the indebted society, with suggested solutions to the problems, right here in NZ.

Impressive and worth a decent read. I haven't decided whether to follow up on it but I have to applaud their efforts, it makes a great deal of sense, though I wonder why I didn't know about this before now so have subscribed to their email updates.

Joshuatree

18-04-2015, 12:04 PM

Baa_Baa

19-04-2015, 10:16 AM

Interesting Joshuatree, thanks for the link.

It doesn't say that there isn't a problem, though it does say that things should be fine for a couple of years yet, in equities at least, if we believe it. Ride the equities wave while we can. That also suggests time to put in place the contingencies for when it all turns to custard again, as seems inevitable.

We saw it in the GFC as well, that solid and counter cyclical companies take a hit but recover and do well in the long run, despite downturns, whereas weak or too-good-to-be-true companies (even whole sectors, ergo finance companies) get slaughtered and take down their investors with them.

Here's another view of the problem that I found difficult to argue against, except that it stops short of predicting when the calamity happens, or what triggers it. Credit to Positive Money NZ for the next articles:

About massive unprecedented liquidity underpinned by personal debt exceeding GDP (and sovereign debt?), being channeled into banking .. http://www.theguardian.com/commentisfree/video/2015/feb/04/another-economic-crash-is-coming-how-did-this-happen-video?CMP=twt_gu (http://www.theguardian.com/commentisfree/video/2015/feb/04/another-economic-crash-is-coming-how-did-this-happen-video?CMP=twt_gu)

And, Can banks individually create money out of nothing?
http://www.sciencedirect.com/science/article/pii/S1057521914001070 (http://www.sciencedirect.com/science/article/pii/S1057521914001070)

How do banks create money, and why can other firms not do the same?
http://www.sciencedirect.com/science/article/pii/S1057521914001434

... which in turn is fuelling more personal and sovereign debt, instead of it going into the productive economy.

(It's obviously working for the banks) I have doubts whether we can do much about that though having read all the of the Positive Money NZ http://www.positivemoney.org.nzwebsite and articles, I'm encouraged.

BAA

Just one more point of view, opinion.Many sitting on the side with cash still?.Missed some great gains.
ï¿½ How Worried Should You Be About A Market Crash? (http://newsletter.sharecafe.com.au/email/link.php?M=87571&N=1048&L=4494&F=H)

BlackPeter

19-04-2015, 11:54 AM

Just one more point of view, opinion.Many sitting on the side with cash still?.Missed some great gains.

• How Worried Should You Be About A Market Crash? (http://newsletter.sharecafe.com.au/email/link.php?M=87571&N=1048&L=4494&F=H)

JT - just help me to understand who said that sitting on the side with cash is a good strategy? Well - at the top of some bull cycles leading into the GFC or some other recessions it obviously would have been, but otherwise?

Actually - if you look at history, I think this would normally one of the most stupid strategies I could possibly think of. Cash (i.e. fiat money) went during inflationary cycles much more often down the drain than e.g. real estate (though, there is obviously a risk - buy a villa in an area going downhill for whatever reason, and you are doomed), gold or ownership (like shares) in companies making stuff people not just want but need. And as always - anything can go downhill, so you need to diversify.

Personally I think that lulling people into a false sense of safety by ridiculing voices of caution is as irresponsible as the alarmist and self serving people pointing to the next crash just to sell their false remedies. I think we can do without either.

Joshuatree

19-04-2015, 01:50 PM

Cheers BaaBaa will have a read.
BP People go to cash for all sorts of reasons ,different ages, health problems, concerns, risk averse,caution whatever. Stupid!!?Such weird thing to say unless one can't see out of their own myopic bubble.
Ive done it a few times ;and boy what a relief based on what id interpreted from amidst the mkt noise. Mostly though I've stayed in as i have the last few years and as is said above made some fab gains. Its great to get all opinions and decide for oneself.And to the folks who have stayed on the sidelines recently thats fine if you are comfortable with that. NZ mkt looking pricey atm in my opinion. Hunt for yield pushing PE's up.

BlackPeter

19-04-2015, 03:44 PM

Joshuatree

19-04-2015, 10:35 PM

Well you could take up whittling , see if you can get a sharp point and prick that bubble and become open to all views or enter the National 4 yearly hide and seek championship.;)

ps a friend and mentor is all in cash and gold stocks atm. I respect his position and point of view re the mkts and his risk profile.

skid

20-04-2015, 04:05 PM

Has anyone in this forum ever tried to take a million bucks out of the bank?--Not an electronic digit going into another acc---Not transfering an electronic digit for a house or a huge chunk of gold--Im talking about 1 million bucks worth of actual cash---It would be interesting to know how that went..

Baa_Baa

21-04-2015, 09:06 AM

Try withdrawing just $10k in cash, you'll trigger the banks AML processes and have to jump through hoops. A million$, well you have to have a million deposited in the first place, so maybe someone else can try that one.
;)

Has anyone in this forum ever tried to take a million bucks out of the bank?--Not an electronic digit going into another acc---Not transfering an electronic digit for a house or a huge chunk of gold--Im talking about 1 million bucks worth of actual cash---It would be interesting to know how that went..

winner69

21-04-2015, 09:22 AM

BaaBaa, have a read of this. This 'economic singularity' is a real thing, i have seen it in action, on a smaller local scale.

The Economic Singularity
Singularity was originally a mathematical term for a point at which an equation has no solution. In physics, it was proven that a large enough collapsing star would eventually become a black hole so dense that its own gravity would cause a singularity in the fabric of space-time, a point at which many standard physics equations suddenly have no solution.
Beyond the “event horizon” of the black hole, the models no longer work. In general relativity, an event horizon is the boundary in space-time beyond which events cannot affect an outside observer. In a black hole it is “the point of no return,” i.e., the point at which the gravitational pull becomes so great that nothing can escape.
This theme is an old friend to readers of science fiction. Everyone knows that you can’t get too close to a black hole or you will get sucked in; but if you can get just close enough, you can use the powerful and deadly gravity to slingshot you across the vast reaches of space-time.
One way that a black hole can (theoretically) be created is for a star to collapse in upon itself. The larger the mass of the star, the greater the gravity of the black hole and the more surrounding space-stuff that will get sucked down its gravity well. The center of our galaxy is thought to be a black hole with the mass of 4.3 million suns.
We can draw a rough parallel between a black hole and our current global economic situation. (For physicists this will be a very rough parallel indeed, but work with me, please.) An economic bubble of any type, but especially a debt bubble, can be thought of as an emergent black hole. When the bubble gets too big and then collapses in upon itself, it creates its own black hole with an event horizon beyond which all traditional economic modeling breaks down. Any economic theory that does not attempt to transcend the event horizon associated with excessive debt will be incapable of offering a viable solution to an economic crisis. Even worse, it is likely that any proposed solution will make the crisis more severe.
We are fast reaching the point where markets are crossing the event horizon, where mathematical investment analysis no longer makes sense. We read that some 25% of bonds in Europe now offer negative interest rates. How do your value equations work in an environment of negative yields? It becomes mathematically impossible for pensions and insurance companies to meet their goals, given their investment mandates, in a world of negative interest rates. While economists may applaud negative rates, those who will need their annuities and pensions are probably not yet aware that their futures have been mortgaged for a set of narrow economic goals, which look as though they are not being fulfilled at any rate. When the bill comes due in 10 years, those in charge today will have moved on to other more lucrative opportunities, and pensioners will realize how screwed they have been.
German bonds have negative yields out to the eight-year mark, as yields have steadily dropped for the last three years:

Switzerland is now issuing 10-year bonds at negative rates. Has lending returned to Europe? If you squint real hard, you might be able to detect an uptick in the next chart.

However, when you take a closer look, you find that the recent uptick is almost all in finance (in just two financial corporations, to be specific) and not in the household and business sectors, which are seeing credit lines being close to them. (Hat tip Alhambra Partners.)
I believe the world will soon find out that by holding interest rates down and allowing sovereign debts to accumulate past the point of rational expectation for being paid, in one country in Europe after another (Greece is just the first), central banks have pushed us past the event horizon, believing they have supernatural powers that will let the global economy escape the debt black hole that has been created by and for governments.

http://www.mauldineconomics.com/frontlinethoughts/half-a-bubble-off-dead-center

BIRMANBOY

21-04-2015, 12:22 PM

To my somewhat bloodshot eye...fundamental flaw is that they are forecasting future problems but trying to model how they could be handled with current solutions. This is denying the probability that new and oncoming issues will drive new and innovative solutions..
BaaBaa, have a read of this. This 'economic singularity' is a real thing, i have seen it in action, on a smaller local scale.

The Economic Singularity
Singularity was originally a mathematical term for a point at which an equation has no solution. In physics, it was proven that a large enough collapsing star would eventually become a black hole so dense that its own gravity would cause a singularity in the fabric of space-time, a point at which many standard physics equations suddenly have no solution.
Beyond the “event horizon” of the black hole, the models no longer work. In general relativity, an event horizon is the boundary in space-time beyond which events cannot affect an outside observer. In a black hole it is “the point of no return,” i.e., the point at which the gravitational pull becomes so great that nothing can escape.
This theme is an old friend to readers of science fiction. Everyone knows that you can’t get too close to a black hole or you will get sucked in; but if you can get just close enough, you can use the powerful and deadly gravity to slingshot you across the vast reaches of space-time.
One way that a black hole can (theoretically) be created is for a star to collapse in upon itself. The larger the mass of the star, the greater the gravity of the black hole and the more surrounding space-stuff that will get sucked down its gravity well. The center of our galaxy is thought to be a black hole with the mass of 4.3 million suns.
We can draw a rough parallel between a black hole and our current global economic situation. (For physicists this will be a very rough parallel indeed, but work with me, please.) An economic bubble of any type, but especially a debt bubble, can be thought of as an emergent black hole. When the bubble gets too big and then collapses in upon itself, it creates its own black hole with an event horizon beyond which all traditional economic modeling breaks down. Any economic theory that does not attempt to transcend the event horizon associated with excessive debt will be incapable of offering a viable solution to an economic crisis. Even worse, it is likely that any proposed solution will make the crisis more severe.
We are fast reaching the point where markets are crossing the event horizon, where mathematical investment analysis no longer makes sense. We read that some 25% of bonds in Europe now offer negative interest rates. How do your value equations work in an environment of negative yields? It becomes mathematically impossible for pensions and insurance companies to meet their goals, given their investment mandates, in a world of negative interest rates. While economists may applaud negative rates, those who will need their annuities and pensions are probably not yet aware that their futures have been mortgaged for a set of narrow economic goals, which look as though they are not being fulfilled at any rate. When the bill comes due in 10 years, those in charge today will have moved on to other more lucrative opportunities, and pensioners will realize how screwed they have been.
German bonds have negative yields out to the eight-year mark, as yields have steadily dropped for the last three years:

Switzerland is now issuing 10-year bonds at negative rates. Has lending returned to Europe? If you squint real hard, you might be able to detect an uptick in the next chart.

However, when you take a closer look, you find that the recent uptick is almost all in finance (in just two financial corporations, to be specific) and not in the household and business sectors, which are seeing credit lines being close to them. (Hat tip Alhambra Partners.)
I believe the world will soon find out that by holding interest rates down and allowing sovereign debts to accumulate past the point of rational expectation for being paid, in one country in Europe after another (Greece is just the first), central banks have pushed us past the event horizon, believing they have supernatural powers that will let the global economy escape the debt black hole that has been created by and for governments.

http://www.mauldineconomics.com/frontlinethoughts/half-a-bubble-off-dead-center

percy

21-04-2015, 12:24 PM

Wonder when the Germans will wake up to Heartland Bank's 4.5% on call a/c.?

Baa_Baa

21-04-2015, 01:14 PM

BaaBaa, have a read of this. This 'economic singularity' is a real thing, i have seen it in action, on a smaller local scale. [snip]

http://www.mauldineconomics.com/frontlinethoughts/half-a-bubble-off-dead-center

A riveting read Winner69 thanks. Like Birmanboy my eyes are bloodshot, and now I have a headache as well. I read Mauldine regularly back in the gold rush 2000-2008/2011 but haven't taken much notice of him since. Interesting how the story hasn't changed a great deal, expect the numbers are all much larger and there's been a GFC in the meantime.

His stories are insightful and affirm observations put forward here, of massive sovereign debt fuelling massive liquidity, deflation and currency debasement .. with the benefits not flowing into productive parts of the economy.

As an aside, there is an assumption, that debt must be repaid, eventually, or obliterated. Actually, the worst thing for a creditor aside from obliteration, it having debt repaid as the creditor loses the interest income and must find a new debtor for their capital. There may be a hypothesis that debt can escalate infinitely as long as the debtor can keep paying the interest?

Anyway, I sense that we have a handle on the problem(s). As was said earlier, there's not much we can do as individuals to solve the problem, though that NZ Positive Money thing looked promising.

It may be an opportune time to move our discussion towards the trigger(s), the timing, immunities and solutions.

Mauldine has not identified a trigger per se though implies it will be a sovereign nation default causing cascading sovereign debt default, bringing down the creditor nations reserve banks, commercial banks and flight of capital from public markets.

His timing for the bust is more difficult to pinpoint from his article, suggesting somewhere in the next two years, or thereabouts (depending on whether the reader 'feels' that it's "2005 or 2007"). [even a stopped clock tells the right time twice a day]

He has no suggested immunities or solutions for the small person, except implying idiocy chasing yield and high risk returns instead of playing it safe, like what?, as he has no suggestions.

So ... Timing, Trigger, Immunities, Solutions.

winner69

21-04-2015, 01:29 PM

BaaBaa, timing

Janet is doing a great job in doing what she has been told to do by the moneymen to ensure the money go round keeps going in her part o the world .......at least to the next presidential election.

So we are safe until well into next year.

Europe might upset the apple cart but the insiders have too much too lose so will stretch things out as long as they can.

So no panic yet .....but one day the proverbial will hit the fan

BlackPeter

21-04-2015, 01:38 PM

Wonder when the Germans will wake up to Heartland Bank's 4.5% on call a/c.?

Actually - any NZD account appears currently quite risky from a European perspective. Yes, good interest compared with what you can get in most European countries (mind you, maybe but Greece), but the NZD is currently very dear compared to the Euro. In long term average you could get nearly 2 NZD for one Euro. These days you get more like 1.40 NZD. Buying expensive NZD, cashing in on 4.5% interest, but losing 20 or 30% on the exchange rate might not be everybody's idea of making money.

Obviously - maybe the NZD stays that high for the rest of times, but maybe it does not. Personally I would think that the lower milk payout (short term), reduced tourism earnings medium term (NZ was never cheap, but currently we are a really expensive tourism destination) and long term the tailing off of the Christchurch rebuild will have at some stage its impact on the NZD.

When it is back to normal and the interest rates still higher than abroad, than I'dd expect the foreign money to flow ...

percy

21-04-2015, 04:19 PM

Actually - any NZD account appears currently quite risky from a European perspective. Yes, good interest compared with what you can get in most European countries (mind you, maybe but Greece), but the NZD is currently very dear compared to the Euro. In long term average you could get nearly 2 NZD for one Euro. These days you get more like 1.40 NZD. Buying expensive NZD, cashing in on 4.5% interest, but losing 20 or 30% on the exchange rate might not be everybody's idea of making money.

Obviously - maybe the NZD stays that high for the rest of times, but maybe it does not. Personally I would think that the lower milk payout (short term), reduced tourism earnings medium term (NZ was never cheap, but currently we are a really expensive tourism destination) and long term the tailing off of the Christchurch rebuild will have at some stage its impact on the NZD.

When it is back to normal and the interest rates still higher than abroad, than I'dd expect the foreign money to flow ...

With NZ economy likely to out perform [again] over the next couple of years, there is no reason not to believe our currency will continue to strengthen .

winner69

21-04-2015, 08:44 PM

BaaBaa, you might be interested in what is happening at the Post Crash Economics Society. Economic students at Manchester University who say thecworld has changed but the syllabus hasn't. A challenge to the old ways and we say lets teach what works today and tomorrow. Good on them and they have some strong support from a few influential people.

http://www.post-crasheconomics.com/about_us/

Read some of articles in Financial Times and The Guardian that are linked on the 'Press Coverage' page. Really good stuff.

Baa_Baa

22-04-2015, 09:44 PM

Thanks Winner, now I'm nursing a migraine after reading all that.

It's like a flashback to my precious metals days, the problem is largely the same only larger now (who would have believed that!), and way larger, it seems incomprehensible but unstoppable. Even the economists are telling us their education and theories are inadequate. The gem in the morass is the ratio of personal debt to GDP. Interestingly the USA have gone flat on that indicator, whereas here we are in NZ still escalating.

On the trigger(s), the last couple of times, the GFC was triggered by hubris and fraud, taking advantage of leveraged debt. Followed by the flash crash, constructed by greed and manipulation (apparently of a single individual, yeah right) but compounded by automated trading feeding on itself.

My takeout is that we probably won't see the trigger, as it's the wood for the trees, and we like most else are not plugged into the devious who tend not to broadcast their intentions. I assume that the trigger will just happen, like the GFC one day I'll hear it on the news or read it in the newspaper and say to myself again "it's happening, again".

Which leads to the timing.

I'm not sure that the timing discussion is much help either, to be frank. It's all pure speculation because we don't know how bad is bad enough, or how or when greed will re-manifest itself, or something else. We could just assume it will happen and it'll be sometime in the not too distant future. If it happened tomorrow would we be prepared? What about in 6 months, or a year, or two? Would we be prepared?

Which leads to the immunities and solutions.

I'll put it out there, that I'd appreciate hearing others views on what they're doing, if anything to protect and preserve capital in the event of market calamity. There's probably some really simple things we can do, like automating our capital exits with stop losses; rebalancing in favour of lower risk assets; diversifying across a broader asset spread; taking less risky or avoiding purely speculative positions; buying only quality earners and to heck with the capital dips?

What are you all doing, if anything?

BAA

BaaBaa, you might be interested in what is happening at the Post Crash Economics Society. Economic students at Manchester University who say thecworld has changed but the syllabus hasn't. A challenge to the old ways and we say lets teach what works today and tomorrow. Good on them and they have some strong support from a few influential people.

http://www.post-crasheconomics.com/about_us/

Read some of articles in Financial Times and The Guardian that are linked on the 'Press Coverage' page. Really good stuff.

skid

23-04-2015, 10:35 AM

I think one thing we need to come to terms with is that we,for the most part are living in an ''economic dictatorship''--Its not really a free market which is why the debt thing has carried on for so long . In most cases the burden is just shifted down to the tax payers while the dictators(Big banks-money men-corporation power brokers)reap the benefits until things get to the point even they cant quite keep a lid on it which leads to things like the GFC(where the tax payers get wholloped again)

As has been stated,the triggers could be a multitude of things (sometimes its just the reaction to a small thing) but most likely I would guess it would be an intentional default like greece realizing that they can never make it useing a shared currency.
Normally when you have your own currency and you get in trouble,your currency devalues making your exports more competitive--with a shared currency,you simply run out of money.
In term of personal protection,thats a hard one aside from the defensive measures already discussed. But if that ugly words deflation comes along---bad news--Your assets crash--If you do have cash,its most likely in a bank where you cant really get at it (or big time haircut) gold devalues -houseing devalues---and ofcourse debt is the worst of all as it is tons harder to repay.(think about having a 800,000 mortgage back when houses cost $60,000 in the 80s)
In my case I payed off mortgages so at least I would still have something ,even if devalued.
I suppose if the system does hold up,even with a ''Haircut'' there may still be enough left for some bargains.
Otherwise-If one sells a house for 1 Mil. how in the world do they get it out of the bank in cash-even if they saw it coming towards the fan? Cash may be king but that doesnt necessarily translate into electronic digits.
I guess protection has to be set down into priorities
Limit Gambling shares and speculative property etc.(and stay in touch with those you do have)--pay off the family home mortgage asap-(keep debt low)-Have some cash on hand--avoid silly things like credit card debt(living beyond your means)--flip side -get used to less(alot of it is simply in our head)what does it take to actually make us happy and satisfied?--what do you need beyond what it takes to provide food-shelter-health-transport, and other basics in terms of living.
Forgive if this is a bit disjointed--consider it a few thoughts on a few things..

BlackPeter

30-04-2015, 05:15 PM

Interesting article in todays "Taking Stock" from Chris Lee: http://www.chrislee.co.nz/taking-stock (You need to accept his copy right conditions to proceed to the article, but I think this is fair enough ...).

He predicts, given the now prevailing negative interest rates in Europe for low risk bonds, that pension funds (not just in Europe) who promised a regular pension payment (based on yesterdays interest rates) will either need to (1) default on their payments - or alternatively (2) take on higher risk (like buying shares instead - which eventually will blow up, as higher risks do) and bring the fund back to position (1).

Short term this trend is likely to keep pushing shares further upwards. However at some stage the PE ratios will be that high that they can't pay for the pension funds commitments either, and then it becomes interesting.

So what is happening then - and how can we protect ourselves? Lets assume the first pension fund goes bust. Pensioners are unhappy, get less (or no money anymore). Consumer spending drops; Pressure on the social safety net increases; tax income drops. Bad.

Lets assume the next pension fund goes bust .... O.k. - I guess you've got the picture.

Chris recommendation is for directly involved clients to get (if possible) out of overseas pensions funds and invest the money instead (conservatively) yourself. Live than off the capital instead of leaving it in the fund and get nothing. Might be a good idea, though not every pension fund allows people to get out.

What does it mean for the rest of us? Probably business as usual: be aware of the coming bubble, invest into defensive stocks, prefer providers of services and products satisfying inelastic demand ... however, this are the shares which are already expensive ... bugger!

percy

30-04-2015, 06:08 PM

[QUOTE=BlackPeter;570287]Interesting article in todays "Taking Stock" from Chris Lee: http://www.chrislee.co.nz/taking-stock (You need to accept his copy right conditions to proceed to the article, but I think this is fair enough ...).

Lets assume the next pension fund goes bust .... O.k. - I guess you've got the picture.

Chris recommendation is for directly involved clients to get (if possible) out of overseas pensions funds and invest the money instead (conservatively) yourself. Live than off the capital instead of leaving it in the fund and get nothing. Might be a good idea, though not every pension fund allows people to get out.

Be very difficult for people locked into their pension fund..

McGyro

30-04-2015, 09:21 PM

percy

30-04-2015, 10:07 PM

Will it really be the end of the world this time, or just another boom/bust on the seven year cycle or whatever predictor takes your fancy? Is the evidence strong enough to justify taking emergency action or is this just another mess to ride out, age permitting?
Its becoming a bit like forecasting rain every day; eventually the forecast will be right.

The concern is having you "wealth" in the right assets to come through the cycle without losing your shirt.
After GFC, companies who had strong balance sheets and paid increasing dividend saw their share prices recover quickly.
This time,or next time will it be the same.?
Buying a farm,and arming yourself with an AK47 does not suit all of us.[the AK47 is to protect your gold bars]!!

McGyro

30-04-2015, 10:41 PM

BlackPeter

01-05-2015, 11:27 AM

Who told you about the gold bars?
Aside from hiding behind heavy inertia objects and keeping away from third party ticket clippers are there any general recommendations out there?
For the GFC, I hid behind the banks, figuring with a strong confidence level that the governments would be forced to intervene. It worked, but may not work a second time.
Given the vast amounts of paper (e)money printed in recent years, a paper house seems a weaker bet than brick or land. But both housing and farming/bare land are said to be overcooked at present. Bonds are dead, so metals appear the only alternative, and their clock appears to be approximately in the right position. Oh gawd, I hate metals; please point out the errors in my thinking.

Obviously you didn't ask me (but Gawd ...) and maybe (s)he will still come back to you;); Using my more earthly reason I find it difficult to fault your chain of conclusions. Wouldn't put all money into gold, but certainly some. Personally - I don't like to hold the pure metal either, so my solution was to buy into some (reasonably low cost) gold miners. This way I still get the upside when gold rises, but still some income as long as it goes sidewards.

Otherwise ... I have some money in the (NZ and AU) retirement industry - (pension funds are not that dominant over here), some shares in the health industry and some in manufacturing and agriculture - always careful to pick companies which do add value and provide for needs vs satisfying the desire for luxury, and some money in energy.

percy

01-05-2015, 06:08 PM

Who told you about the gold bars?
Aside from hiding behind heavy inertia objects and keeping away from third party ticket clippers are there any general recommendations out there?
For the GFC, I hid behind the banks, figuring with a strong confidence level that the governments would be forced to intervene. It worked, but may not work a second time.
Given the vast amounts of paper (e)money printed in recent years, a paper house seems a weaker bet than brick or land. But both housing and farming/bare land are said to be overcooked at present. Bonds are dead, so metals appear the only alternative, and their clock appears to be approximately in the right position. Oh gawd, I hate metals; please point out the errors in my thinking.

Buying the farm was so you could "live off the land" when cash and savings were worthless.
As I said the farm and the AK47 does not suit me.
Neither does holding gold,or any other metal.I am not prepared to buy art,stamps etc for investment, as I don't have any expertise in those fields.
So I am left with my unencumbered house,some money in the bank,a bank I part own,and a spread of shares in most sectors except for retail.The companies I have shares in have strong balance sheets and capacity to pay increasing dividends.

winner69

02-05-2015, 03:47 PM

BaaBaa, another migraine coming on? Then read this from my favourite blog (Cluster**** Nation)

We need to get ready

Money Worries

The cynicism among the informed classes has never been so deep. Even the pompom boys in the cheerleading clubs like CNBC and The Wall Street Journal express wonderment at the levitation of stock indexes and bond values. They chatter about a “correction” of 20 percent being a healthful tonic that would clear away some dross and quickly usher in a new episode of “growth” — or growthiness, which, like truthiness, became an acceptable approximation of the real thing. The truth, as opposed to truthiness, is they no longer believe their own bull**** about growthiness.

The suppression of interest rates and pervasive accounting fraud has thundered through the financial system, and the deformities caused by it have emerged in currency war, currency instability, trade collapse, and political crisis. Years of central bank intervention have stolen the capital of the future to construct a Potemkin economy meant to conceal the sickening gyre of diminishing returns strangling business as usual.

Until it collapses by a great deal more than the wished-for mere 20 percent, more perversities will be piled onto the already existing burden. Is it not a wonder that professionalized interest groups like AARP have not screamed bloody murder over the suppression of interest rates which deprives its members of bank account and bond interest on savings? Instead AARP, like virtually every enterprise in America, has turned to racketeering. Don’t worry, they’ll be gone from the scene soon enough.

The next shoe to drop will be various forms of bail-ins and attempts to prevent bank account and money market holders from getting access to their cash. A withdrawal above $2,000 already can trigger a report to the IRS. The next step will be to put a simple ceiling on withdrawals. Will that trigger public ire? Who knows? Nothing yet has in the USA. The meme currently circulating is the fear that government would like to abolish cash altogether and put in a regime of all-electronic money. Being allergic to conspiracy ideas, I’m skeptical about this idea, but I really can’t dismiss it.

A cashless society would conceptually allow government much more leak-proof control of all citizen money transactions. Mainly it could funnel tax revenue into the treasury much more efficiently. It raises some obvious practical concerns, such as: would such a program lead to an enhanced colossal skim of credit card company off-creaming? And what about the percentage of poorer Americans who don’t have credit cards or bank accounts now, either because they don’t understand how it all works, or they’re forced to function in the “gray” economy for one reason or another (e.g. a drug felony rap). And what kind of as-yet-unknown perverse work-arounds would this new system provoke?

I put the question to a table of college-educated people last night and their response was surprising: utter complacency. They’re already used to paying for most things with plastic, they said, and their employer already withholds a big part of their regular paycheck for taxes, so what does it matter? They couldn’t grok the possibility that a cashless money system might easily deprive them of access to whatever reserves they have. Or perhaps, more specifically, they couldn’t imagine an economic or political emergency that might provoke such a situation.

They might find out sooner than they realize. As I suggest in the lede, apprehension is growing that some kind of “corrective” event is at hand on the financial scene. Even the supposedly salubrious 20 percent S & P drop could set off a chorus of margin calls that would make the trumpets of Jericho sound like a kazoo concert. What will Americans do if they can’t get their money out of the banks? The last time this happened, 1933, we were a hard-up but polite and highly-regimented society, and the automatic rifle was a novelty restricted to a relatively tiny army and Al Capone’s crew. Behind the financial jitters of the informed minority is the greater fear of social unrest.

http://kunstler.com/cluster****-nation/money-worries/

BIRMANBOY

02-05-2015, 05:13 PM

W69 hopefully your tongue is firmly planted in your cheek (as opposed to Mr. Kunstler's other orifices)...I mean come on most of the page is devoted to flogging his books....All I can say is his name doesn't appear to be an accident.:scared: Apart from that BaaBaa will be suffering from sensory overload.

percy

02-05-2015, 05:51 PM

winner69

03-05-2015, 11:14 AM

Dear Lord I pray this is not a prelude to another one of W69's Sunday rants.!

Cheeky there me old mate

No rant this week. Been to church to seek forgiveness for investing in a bank with outrageous interest margins that leads to excessive profits.

percy

03-05-2015, 12:18 PM

Cheeky there me old mate

No rant this week. Been to church to seek forgiveness for investing in a bank with outrageous interest margins that leads to excessive profits.

You are a very naughty boy.
Bet you prayed that those excessive profits would drive the share price higher this week [and every week]!!

winner69

03-05-2015, 01:38 PM

You are a very naughty boy.
Bet you prayed that those excessive profits would drive the share price higher this week [and every week]!!

She said 'son you should feel like that. Banks making excessive returns on capital is not good for society and a form of greed. All it does is make senior managers and shareholders wealthier at the expense of the poorer ones in society .......and by the way son I expect to see the collection plate having more in it in future'

percy

03-05-2015, 02:52 PM

She said 'son you should feel like that. Banks making excessive returns on capital is not good for society and a form of greed. All it does is make senior managers and shareholders wealthier at the expense of the poorer ones in society .......and by the way son I expect to see the collection plate having more in it in future'

Sounds as though she does not mind living off the proceeds sin,Sinner69!!

winner69

05-05-2015, 02:19 AM

robbo24

05-05-2015, 09:35 AM

BaaBaa, not migraine material

Most on this site (Percy, hoop, ratkin and a few others excepted) probably think that the last 5 years (maybe10) is the norm in the investing world. Far from it but take solace that this time it is different. Or is it?

https://www.janus.com/bill-gross-investment-outlook

Winner69, I'll see you in 10 minutes. We have to get to the bank IMMEDIATELY. Print out withdrawal forms, you fill them out and I'll drive. WE HAVE TO BE FIRST IN LINE TO GET OUR CASH BEFORE BANKS SHUT THEIR DOORS.

http://www.marketwatch.com/story/investors-are-borrowing-more-money-than-ever-to-buy-stocks-2015-05-04

Baa_Baa

05-05-2015, 08:55 PM

Poor Bill Gross, wondering, perhaps even hoping, that he lives to see just one more semi-fatal blow to the USA/global markets. His rather melancholy article is more self indulgent that those I remember from the gold bull market period, or his barely concealed glee of the 2007/8 crash. Of course he is correct, the stopped clocks do tell the correct time twice day. They just don't tell you 'when' it will happen. None of them do.

Here's another http://www.zealllc.com/2015/chsmangr.htm, though very much the dogged contrarian, complete with fancy charts designed to put the frighteners on us and sell subscriptions. Worth a read though, this one focuses on the China bull. Of course they are always correct as they recount history which is fact and conjoin that to observations of market behaviours, align it the younger generations ignornance who have wealth but no experience of severe or total loss. The outcome is obvious. History repeats. The Gold bugs might like to read that link above, or skip to the last couple of para's, but I wouldn't be rushing out to short or buy PUTS on the China linked EFT's right now unless you can stand the losses until it does fold. Maybe better to prepare for going short immediately that your chart says it's broken. Again, they don't tell you 'when' it will happen. None of them do.

What none of them have is a sense of timing. But there's plenty of them forecasting the bust. Just like they were in 2007/8, though they were forecasting it from 10-20 years before that as well ;) It will end when it ends, then the bust happens, then the rebuild, and lo and behold, another 10 years of subscription revenues to enjoy forecasting the next calamity.

So considering that none of us are asking anyone to subscribe, and I sense most agree that there's a lot wrong with world finances and economies, and no one really knows which of the numerous potential triggers will go off first - albeit there are plenty of triggers cocked, the only real option is to protect yourselves.

Which leads back to the discussion of what immunities and treatments?

BAA

BaaBaa, not migraine material

Most on this site (Percy, hoop, ratkin and a few others excepted) probably think that the last 5 years (maybe10) is the norm in the investing world. Far from it but take solace that this time it is different. Or is it?

https://www.janus.com/bill-gross-investment-outlook

noodles

05-05-2015, 10:03 PM

Which leads back to the discussion of what immunities and treatments?

BAA
Here are some ideas:
-Buy put options
-Short NZD. A bout of risk aversion tends to put pressure on the NZD
-Go to cash
-Build a portfolio of shorts
-remove speculative stocks from your portfolio

I'm not suggesting these would suit you, but if I thought the sky was falling, I might consider some of these.

winner69

06-05-2015, 02:27 AM

BaaBaa, no need to worry. It's all honky dory

Just keep on doing what you are doing now

http://www.advisorperspectives.com/actions/generate_pdf.php?url=newsletters15/David_Rosenberg-Bullish_on_Stocks.php,newsletters15/10-rosenberg2.php,newsletters15/10-rosenberg3.php

BlackPeter

06-05-2015, 08:21 AM

Winner69, I'll see you in 10 minutes. We have to get to the bank IMMEDIATELY. Print out withdrawal forms, you fill them out and I'll drive. WE HAVE TO BE FIRST IN LINE TO GET OUR CASH BEFORE BANKS SHUT THEIR DOORS.

http://www.marketwatch.com/story/investors-are-borrowing-more-money-than-ever-to-buy-stocks-2015-05-04

BaaBaa, no need to worry. It's all honky dory

Just keep on doing what you are doing now

http://www.advisorperspectives.com/actions/generate_pdf.php?url=newsletters15/David_Rosenberg-Bullish_on_Stocks.php,newsletters15/10-rosenberg2.php,newsletters15/10-rosenberg3.php

Winner & Robbo - not quite sure whether you get the point of this thread? This is not about "dooms day tomorrow" scenarios, but it is about recognising and preparing for the next financial meltdown (which will come as certain as winter follows summer, though admittedly with less accurate timing).

I agree - its not (yet) the time to run for the hills, but it is always a good time to be prepared and to have a plan how to best get there, what to take with you and how to protect the rest of your property if & when the tsunami arrives. Look - winner & robbo, I assume that you are yourself quite astute investors and probably (hopefully) do this as a matter of course, but I don't think that you do less experienced investors on this thread a great service by ridiculing the subject.

Re the Rosenberg article - some interesting points ... and he feels that the next down cycle might be due 2018. Well - this is only 3 years away, and he was not always right in the past.

robbo24

06-05-2015, 09:07 AM

Look - winner & robbo, I assume that you are yourself quite astute investors and probably (hopefully) do this as a matter of course, but I don't think that you do less experienced investors on this thread a great service by ridiculing the subject.

Ok, yeah fair enough. This thread does raise some very good points. Sometimes you have to read between the lines to see that I am actually being serious.

My suggestion is to buy some silver bullion. How low can silver really go? You don't even need to buy a safe. You can disguise 1kg bars of silver as a collection of doorstops or paperweights.

If you need to protect yourself from the anarchy outside (once it all caves in) you can put a few bars into a pillowcase and use it as a flail to bludgeon your enemies.

If you have enough 1kg bars you can link them together into a form of platemail armor, to protect yourself from the raging hordes. Combined with a bicycle helmet you will have full body protection.

BIRMANBOY

06-05-2015, 10:03 AM

Speaking seriously, yes it is possible, I actually do respect investors with an eye to the future and whatever it holds. If I was of that mind my list of positioning strategies would be as follows. (i'm in brackets at the end)
(a) keep a couple of thousand cash mixed denomination bills in a jar in the back yard. (yes but you'll never find it)
(b) make sure our mortgage was paid off (yes)
(c) Make sure you keep an "earthquake" emergency storage full with all the usual things (yes)
(d) Keep a functioning bicycle available (no not yet)
(e) try and stay in shape (yes)
(f) try and get to know the neighbours (no not really)
(g) Diversify investments as much as possible even if one sector is not particularly productive (yes)
(h) Don't put/keep all of you money in banks (no way)
(I) always have a cushion fund of 3 months accessible if problems occur suddenly (yes)
(j) if you rely/need medications...try and maintain 2-3 month cushion (need to do)
(k) if you are a "worrier" or thinking impending doom is just around the corner position yourself with that in mind so you wont be stressing yourself out. (not applicable)
(l) if you are one of the above think seriously about trying to mitigate some of that with some counselling/mentoring.....while its great to be aware of future problem areas, I don't think its productive to be overly concentrating on protection ...too much protection means the investing cycle is probably going to stagnate...maybe for the rest of your life. (not applicable)
(m) more specifically regards investments...nothing wrong with investing in your hobbies, trade, skills, educational qualifications and other ways or methods of making money..for example..learning how to fix/service your own car (or others). Get a skill so you can do your own plumbing/painting/electrics/. Learn how to make and sell wooden do dads on trade me.... the list goes on. As KW mentioned somewhere turn a hobby into a money making opportunity. Becoming diversified means above all not having to rely on one method of getting income. Income from shares and bonds is just one way. I'm retired but still making more working couple of days a week , than I'm getting from my investments.
(l) lastly recognise that investing is not really about making a killing..its about compounding growth and its much easier to make 6 or 7% per annum and then let it work for you.
Obviously everyone will be in a different position both mentally and financially. Good luck to those finding the way that works for them.

winner69

06-05-2015, 10:47 AM

Birman me old mate

Hope j) means crates and crates of whiskey and champagne or whatever

BIRMANBOY

06-05-2015, 03:01 PM

W69 I'm one of the few that don't smoke or drink so have saved tens of thousands over the years. However am very fond of cashmere sweaters so have stocked up on those..have about a five year supply of new ones on hand. Hong Kong in Sept so will be stocking up again. I can always sell them on trade me for a tidy profit in emergencies. One could probably even make money on booze...buying the good vintages by the cases.. holding for a few years and putting them in auction....well whatever was left anyway:p
Birman me old mate

Hope j) means crates and crates of whiskey and champagne or whatever

dingoNZ

07-05-2015, 08:58 AM

The S&P 500 has nearly tripled since plunging to a 12-year low during the financial crisis in March 2009. The Nasdaq closed at a record two weeks ago, when it erased its losses since the dot-com bubble in 2000.
The Standard & Poor’s 500 Index trades at 17.6 times forecast earnings of its members, above the five-year average multiple of 14.5 times. The benchmark equity gauge has climbed 1 percent this year, closing at a record April 24, even amid a slowdown in U.S. economic growth during the first quarter.
Yellen, speaking at a forum on finance in Washington on Wednesday, said that after holding rates near zero since December 2008, the Fed must be on the lookout for threats to financial stability.
‘Quite High’

“I would highlight that equity-market valuations at this point generally are quite high,” Yellen said in response to a question. “Now, they’re not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there.”
Using a valuation technique sometimes referred to as the Fed model, U.S. equities remain cheap compared with government bonds. The S&P 500’s earnings yield, or profit as a percentage of price, stands at about 5.5 percent, more than twice the 2.2 percent rate on 10-year Treasuries.
While stocks have been cheaper on this basis at various points during the bull market that began in 2009, they’re still less expensive relative to bonds than any time in the three decades that preceded it, data compiled by Bloomberg show.
On July 15, the Fed said in its semi-annual Monetary Policy Report that valuations of social media and biotechnology shares might be “stretched.” After a temporary pullback, both have rallied as the Nasdaq Composite Index advanced 11 percent.

Interesting comments form Yellen

winner69

07-05-2015, 09:25 AM

BaaBaa, probably rain and wind where you are today so have a read of this. Might need a coffee

http://affluentinvestor.com/2015/05/blood-moon-market-meltdown/

Baa_Baa

07-05-2015, 09:43 AM

Morning winner. Rain, wind .. you mean living in NZ then.

Thanks for the thought re that article, I tend to go straight to the end first and this one was an easy read "I'm afraid that we're going to have to keep doing the hard work of financial and economic analysis to make investment decisions, instead of relying on blood moons. Sorry it didn't work. It was a cool idea."

Personally I'm more interested that we've explored some of the macro views and have largely avoided the wackos and conspiracy theorists - too much doom and gloom will do your head in. If someone spots a trigger going off though - feel free to share!

As comments are shifting to immunities and treatments, there are many good thoughts being shared here, I hope it's helping people as it's helping me broaden my views on investing ahead of potentially troubled times. I'm particularly interested in some of the observations that aren't entirely defensive, like the Puts and shorts.

BaaBaa, probably rain and wind where you are today so have a read of this. Might need a coffee

http://affluentinvestor.com/2015/05/blood-moon-market-meltdown/

winner69

07-05-2015, 10:34 AM

BaaBaa - my modus operandi is outlined on the Investing Strategies and Secular Bear Markets thread. Essentially applies to all types of markets.

Maybe the times of impending total wipe out are different. In 2008 I was essentially cashed up (was a slow decline in markets pre crash) I bought some silver and gold because that's what you do in times of crisis. I lust after them every now and again but remind myself that in NZD terms they are only worth what I paid for them. Some mates say should have sod them at the top but that would have been trading and forgetting the reason for buying in the first place.

Other friendly advisors said I should get into hedge funds, esp absolute return ones, as protection in dire times. Never really understood the ins and outs of the secret society so didn't go down that path. Don't think I have missed out.

If the world ever falls apart suppose one has to make do with ones lot on life. Just be debt free and have a roof over your head and lead the good life with what's left. What would I do with my silver and gold anyway.

Aaron

08-05-2015, 09:13 AM

Funny Janet Yellen saying that US shares might be over valued and a threat to financial stability. It seems moronic as she is suppressing one of the major inputs to share valuation, "interest rates".
I only hope she is just softening up financial markets for a rates rise otherwise she sounds like a bit of a plonker.

RGR367

09-05-2015, 02:17 PM

Here's another view of a meltdown from Peter Thiel. Sharing it here and on XRO thread http://www.businessinsider.com.au/peter-thiel-has-an-insane-story-about-what-a-real-tech-bubble-feels-like-2015-2

Aaron

13-05-2015, 08:27 AM

Aaron

13-05-2015, 02:26 PM

I rang NZ Mint it sounds pretty straight forward.

Joshuatree

13-05-2015, 02:40 PM

Easy ; have all your teeth filled/ replaced with gold.Really secure location except if you snore.

Lizard

14-05-2015, 09:46 AM

Apparently Martin Hawes was on TV this morning saying the property market could bring down the banks. I had someone who doesn't usually take an interest in things financial ask about how to buy physical gold. If this current financial system is a confidence game then that to me is the first sign of confidence reducing.
By the way how do you buy physical gold in NZ? I guess I need to search the site as this is the most likely place to find info on that sort of thing.

I was interested on reading the financial stability report to note the graph of bank lending growth versus deposit growth (page 7). In the footnote to the chart it says:

"Deposits counted as core funding’ includes haircuts made as part of the liquidity policy, which increase according to the size of the deposit."

Can't be sure exactly what that means, but I think we can all have a good guess. Taking a very risk averse approach, it's probably a good idea to think about the following:

Is having more than $100k in deposits with a single bank in a single account name an unnecessary risk?
Is your money in a broker cash management account likely to be as safe as in your own personal account?
Is a term deposit likely to be as safe as an on-line savings account?
On the brink of a crisis, is money going to be safer still in a transactional account?
Is it safer to have deposits across banks with parent companies in more than one geographic region?

Okay, so in the event a bank actually goes down, all bets are off as to what we can count on keeping. Having your health and some problem-solving abilities are going to count for a lot ... but there are also bound to be some investors that will be "luckier" than others.

Aaron

14-05-2015, 01:25 PM

Can't be sure exactly what that means, but I think we can all have a good guess. Taking a very risk averse approach, it's probably a good idea to think about the following:

Is having more than $100k in deposits with a single bank in a single account name an unnecessary risk?
Is your money in a broker cash management account likely to be as safe as in your own personal account?
Is a term deposit likely to be as safe as an on-line savings account?
On the brink of a crisis, is money going to be safer still in a transactional account?
Is it safer to have deposits across banks with parent companies in more than one geographic region?

Okay, so in the event a bank actually goes down, all bets are off as to what we can count on keeping. Having your health and some problem-solving abilities are going to count for a lot ... but there are also bound to be some investors that will be "luckier" than others.
Cyprus was probably a good example of what happens in a crisis. Depositors get hit but the guy leveraged to his eyeballs owning real assets enjoys lower interest rates. The whole financial system seems to be geared towards borrowers at the expense of savers.
I wonder if shareholdings will be safe if I use a margin account that has ASB Securities holding my shares on my behalf. Maybe I should own the shares in my own name. Then at least they are not able to sell them even if they are not supposed to but then I am not able to leverage up if a crisis doesn't end the world but creates a wonderful investment opportunity instead.

Baa_Baa

15-05-2015, 10:42 AM

"A global “trigger” involving anything from US interest rate rises to a Greek government default could upset New Zealand’s over-indebted economy, Rob Hosking writes. But the Reserve Bank does not expect a “correction” any time soon: migration and a growing economy will keep the market buoyant, deputy governor Grant Spencer says." NBR 15 May 2015.

An interesting choice of word .. "trigger". Heard that before somewhere. So if RBNZ doesn't expect a “correction” any time soon due to growth and migration, can we expect a correction any time later when growth and migration decline?

Does this seem overly simplistic, almost implying that if NZ growth and migration continue, NZ has some immunity to "anything from US interest rate rises to Greek government default"?

PSE

15-05-2015, 06:47 PM

I was interested on reading the financial stability report to note the graph of bank lending growth versus deposit growth (page 7). In the footnote to the chart it says:

Can't be sure exactly what that means, but I think we can all have a good guess. Taking a very risk averse approach, it's probably a good idea to think about the following:

Is having more than $100k in deposits with a single bank in a single account name an unnecessary risk?
Is your money in a broker cash management account likely to be as safe as in your own personal account?
Is a term deposit likely to be as safe as an on-line savings account?
On the brink of a crisis, is money going to be safer still in a transactional account?
Is it safer to have deposits across banks with parent companies in more than one geographic region?

Okay, so in the event a bank actually goes down, all bets are off as to what we can count on keeping. Having your health and some problem-solving abilities are going to count for a lot ... but there are also bound to be some investors that will be "luckier" than others.

I am not sure the terms of the open bank resolution, this is a good point. Investors should not consider bank deposits secure and yes people taking on debt are rewarded while savers are punished.
Sharemarket PE ratios are high indicating they will provide low returns and are risky.
I don't think there is any way to predict the trigger, as baabaa says earlier on the thread. The cause of the next crash is the debt buildup but confidence is ephemereal.
People could be freaked by something random.
The GFC was caused by fraudulent loans the CEOs were rewarded billions in bonuses and used shareholder funds to pay the fines. They should have been locked in jail because they knew what they were doing.
Finance has increased beyond all proportion, it should be only the lubricant for the economy - but now it seems the tail is wagging the dog.
My approach is no debt and invest in only cheap companies, I am looking to move to cash but only short term.
Problem with gold and silver is it is pretty but doesn't pay its way like shares with dividends, farms with produce and houses with rent.
If you can ignore the crash and hold your companies at least but ideally have a little cash to deploy the crash when it comes will prove another great opportunity like the GFC was.

Baa_Baa

29-05-2015, 12:38 PM

China's Shanghai Composite down 6.5% 28/5/2015 eyes on follow through today.
http://www.ft.com/cms/s/0/983cc7e8-050c-11e5-9627-00144feabdc0.html News
http://stockcharts.com/h-sc/ui?s=%24SSEC Chart

robbo24

29-05-2015, 03:41 PM

China's Shanghai Composite down 6.5% 28/5/2015 eyes on follow through today.
http://www.ft.com/cms/s/0/983cc7e8-050c-11e5-9627-00144feabdc0.html News
http://stockcharts.com/h-sc/ui?s=%24SSEC Chart

Meanwhile, the Shenzhen Composite is forming something of hammer (at the time of posting) http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=CN%3A399106&x=56&y=7&time=8&startdate=1%2F4%2F1999&enddate=5%2F28%2F2015&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=4&maval=10%2C30%2C50%2C100%2C200%2C300&uf=8&lf=1&lf2=0&lf3=0&type=4&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

:D

winner69

07-06-2015, 09:39 AM

winner69

07-06-2015, 01:34 PM

The GFC was just the beginning of the end

http://www.news.com.au/finance/superannuation/gfc-was-merely-the-beginning-of-the-end-what-do-you-do-when-the-iceberg-hits/story-e6frfmdi-1227386809222

This guy says have a nice house you want to live in and "For the rest of your assets, Mr Eliseo advocates the ‘permanent portfolio’ model: 25 per cent shares, 25 per cent bonds, 25 per cent in cash and 25 per cent in gold."

PSE

07-06-2015, 06:26 PM

Greek situation just won't go away

The Economic Hitmen doing their job well

As the founder of that term says - Greece is thrown in the fire of debt again. The EHMs and plutocracy incinerate the birth-place of democracy. How symbolic is that?

Evil still rules
Good comments winner.
I don't really see a huge issue with Greece, the ruling regime Syriza will default on the debt - it was always inevitable. Because the banksters have had years to prepare I don't think it will endanger the financial system. Outside the Euro with a realistic value for their currency the greek economy will be able to reject austerity, devalue it's exchange rate to where it always should have been and then it will start to recover.
Like Iceland did, they were one of the most indebted and once they defaulted the fastest to recover.
http://www.tradingeconomics.com/greece/unemployment-rate
I predict unemployment willl drop from 25%, how could such a rate ever be considered acceptable?

The crash when it comes will be caused by speculative attitudes driving PE's to rediculous levels and too much debt, this is the reason for every sharemarket crash.
As I see it the trigger is irrelevant and totally unpredictable.
At some point people will ask why the emperor has no clothes, the problem is not the person who points it out but the people who sold him the fine suit of clothes.

PSE

07-06-2015, 07:50 PM

Some people predicted the GFC, maybe the next crash is known. I am no expert to do this though - I don't see the point in speculating.
Gold doesn't generate a return so buying gold is a gamble that someone will pay you more tommorrow than they will today as they get more scared. Sentiment is fickle.
Ben Graham would have advocated a 50/50 bond share split maybe moving to 25% shares at times like these when the sharemarkets are obviously overheated, 75% long dated super safe bonds.
I have given this issue a lot of thought, two reasons I am not holding bonds.
The first is that most bonds I have seen have unfavourable terms for the holder, they are long dated but the issuer can redeem them if for example interest rates fall.
I am thinking of a contact energy bond issue in particular, I think the problem is widespread though.
This means that the investor has all the risk of rising interest rates but none of the reward in terms of capital gains on the bonds when shares fall. Which is the whole point of holding bonds and shares right, if shares fall then bonds rise and vice versa.
As the shares or the bonds rise you are selling them and buying them as they fall which is exactly contrary to prevailing market wisdom and therefore the exact right thing to be doing.
Furthermore, both bonds and shares are overvalued at present.
As I see it that leaves cash and shares, cash is the worst investment class over the long term due to inflation. So my approach is to be holding my house with the mortgage fully paid off, 75% of my portfolio in contrarian/value/deeply disliked stocks and 25% in cash. This is where I am moving to now.
If we see another great opportunity like the GFC I will be in a position to really back up the truck by unleashing the cash and taking about 20% debt against my total asset position, just as interest rates bottom out.

PSE

07-06-2015, 08:01 PM

That particular contact energy bond issue was a real dog, they also had a clause which said they could stop paying interest also at their discretion. With terms like these holding bonds seems to be on a hiding to nothing versus owning a stake in the business, on the correct side of this particular crappy deal.

winner69

09-06-2015, 09:04 AM

Good comments winner.
I don't really see a huge issue with Greece, the ruling regime Syriza will default on the debt - it was always inevitable. Because the banksters have had years to prepare I don't think it will endanger the financial system. Outside the Euro with a realistic value for their currency the greek economy will be able to reject austerity, devalue it's exchange rate to where it always should have been and then it will start to recover.
Like Iceland did, they were one of the most indebted and once they defaulted the fastest to recover.
http://www.tradingeconomics.com/greece/unemployment-rate
I predict unemployment willl drop from 25%, how could such a rate ever be considered acceptable?

The crash when it comes will be caused by speculative attitudes driving PE's to rediculous levels and too much debt, this is the reason for every sharemarket crash.
As I see it the trigger is irrelevant and totally unpredictable.
At some point people will ask why the emperor has no clothes, the problem is not the person who points it out but the people who sold him the fine suit of clothes.

But THEY will want even more ....the last drachma extracted

You might enjoy this
http://www.davidmcwilliams.ie/2015/06/08/greeces-downfall-europes-disgrace

BlackPeter

09-06-2015, 09:58 AM

But THEY will want even more ....the last drachma extracted

You might enjoy this
http://www.davidmcwilliams.ie/2015/06/08/greeces-downfall-europes-disgrace

So who's fault is it then? The Greek enjoyed the good times splashing their credit away by living in a low value economy but paying themselves some of the best salaries in Europe in combination with putting in the shortest working hours before enjoying a quite substantial pension. They just loved to spend their days sipping coffee while adding up the highest number of strike days per worker (used to call this the English disease, but the Greek took over).

It must be nice to enjoy a good lifestyle paid by other peoples hard work ... the problem is just that at some stage you are running out of people who want to fund you. Oops - wasn't that the definition of socialism?

Maybe they should kick them completely out of the EU - just move the borderline back and gift Greece to mother Russia. I am sure, Putin will be delighted ...

Biscuit

09-06-2015, 12:52 PM

You might enjoy this
http://www.davidmcwilliams.ie/2015/06/08/greeces-downfall-europes-disgrace

What's mystifying about that article is the implicit assumption that people still have significant personal savings in Greek banks. Why, after all this time would anyone have any personal money deposited in a Greek bank account? Surely in Europe, you can just bank with your local Deutsche Bank branch?

Baa_Baa

09-06-2015, 01:31 PM

"Greece is only 2 per cent of eurozone GDP, but maybe we should consider that the plughole is also only 2 per cent of the bath."

Brilliant! ... quote of the meltdown, well the imminent almost sometime maybe is it the meltdown yet ... starting with a Greek bank run this weekend!

But THEY will want even more ....the last drachma extracted

You might enjoy this
http://www.davidmcwilliams.ie/2015/06/08/greeces-downfall-europes-disgrace

Bjauck

09-06-2015, 02:58 PM

... Like Iceland did, they were one of the most indebted and once they defaulted the fastest to recover... Didn't Iceland refuse to re-imburse foreign account holders in their banks. So, for example, in the end didn't the British and Dutch governments reimburse their own citizens who had Icelandic Accounts?

I am probably displaying my ignorance, but did Iceland get off more lightly because most of its creditors were private depositors (and less able to kick up a fuss!) as opposed to Greece being indebted to financial institutions and government creditors?

PSE

15-06-2015, 11:03 PM

Didn't Ireland refuse to re-imburse foreign account holders in their banks. So, for example, in the end didn't the British and Dutch governments reimburse their own citizens who had Icelandic Accounts?

I am probably displaying my ignorance, but did Iceland get off more lightly because most of its creditors were private depositors (and less able to kick up a fuss!) as opposed to Greece being indebted to financial institutions and government creditors?

This problem is endemic to our political system of big business lobbying/controlling governments and a propagandised populace who are so divorced from reality they would call this democracy. No reason to be surprised it is entirely predictable and consistent with experience.
Under this system the public interest is the interest of large corporations, the peace process is whatever war the United States is exporting and special interests are those of the general public.
If you have the time this 25 minute segment of Bill Black, who helped prosecute the wrongdoers in the savings and loan crisis is instructive. As he says by encouraging the criminal behaviour which lead to the global financial crisis we are guaranteeing that the next crash will be worse.
http://billmoyers.com/episode/too-big-to-jail/

What the bank fraudsters did was fine in this system of 'morality' because they weren't attacking the structure that supports the leeches and scabs on top. The people that need to pay for the banker's frauds are the greek people, the special interest groups. Who knows what sort of nefarious agenda they may have, they may want weekends off or something.

PSE

15-06-2015, 11:28 PM

So who's fault is it then? The Greek enjoys the good times splashing their credit away by living in a low value economy but paying themselves some of the best salaries in Europe in combination with putting in the shortest working hours before enjoying a quite substantial pension. They just loved to spend their days sipping coffee while adding up the highest number of strike days per worker (used to call this the English disease, but the Greek took over).

It must be nice to enjoy a good lifestyle paid by other peoples hard work ... the problem is just that at some stage you are running out of people who want to fund you. Oops - wasn't that the definition of socialism?

Maybe they should kick them completely out of the EU - just move the borderline back and gift Greece to mother Russia. I am sure, Putin will be delighted ...

Blackpete you should read about socialism and capitalism then you might understand what the terms mean. Both systems are wrong in how they define our problems/solutions and neither has been implemented but that is another discussion.
Just as they were limited so are most people when attempting to frame every problem they see as socialist or capitalist, us or them. There is no us or them just we.

It's got nothing to do with the discussion of the financial crisis or the greek situation.

Countries as different as greece and germany should never have been joined in fiscal union. So they partied hard while the Germans scrimped and saved in a stoic manner, the system is at fault not the individuals. Or both are at fault but to me mainly the system that enabled such a large transfer without having checks in place.

Baa_Baa

16-01-2016, 12:54 PM

BlackPeter

17-01-2016, 12:18 PM

This thread was started in May 2015, I found it interesting reading back on our thoughts at the time.

With hindsight, US markets did top out in May / June 2015 but it was uncertain how events would play out. Now only 6-7 months later it's looking like our discussions were quite timely, if not precisely accurate about the triggers. :sleep:

So now that we are in what appears to be a bona-fide international equities bear market, backdrop to a surprising resilience (denial?) in the NZX, it seems timely once again to discuss the immunities and solutions.

For my part, I progressively exited all my NZX blue-chips and earners, all in profit which was nice, just off their highs. By August that seemed astute with the first serious rout. Since then there's been a healthy rebound, though some have not fully recovered above my sell price, whereas some rebounded strongly and are at new highs. I didn't buy back any of them though. My focus shifted to backing a single NZAX high-growth tech company and taking a much more active trading approach with some tech's on ASX, and maintaining a higher ratio of cash than I typically do.

So I'm definitely not 'immune', but so far the 'solution' is working Ok, albeit still with risks. I think it's time to revisit it though, as it looks like things will get worse, perhaps a lot worse, perhaps for a long time.

How's it going for you and what measures if anything are you doing to protect your investments, preparing for the fiscal meltdown that appears now to be upon us?

Did we get the timing and trigger right? I guess the proof is in the pudding (which still needs to be eaten).

Are we in a "bona fide bear market"? Yes, average PE's are high, but than interest rates are low - meaning that stocks don't need a high PE to compete with bonds. Sort of uncharted territory and everybody's guess is as good as mine.

Do I expect share prices to keep climbing like during the recent 5 years or so? No. Do I expect them dropping like falling knifes as long as competing bond rates are scratching the bottom of the barrel? No. Personally I think that a secular hibernation (look at Japan) might be more likely for the next decade or two than a secular bear, but time will tell. What we do know is, that the next recession and stock crash will come - at some point in time. I just don't know,whether this point is tomorrow, next week, next year, next decade or further out. What we do know is that moving too early out of stocks can be as expensive than staying long for too long.

So - how to prepare for the eventualities? I think it is always a good idea to get out of high PE stocks (unless they show positive earnings and sustained growth) ... particularly if they are not in a clear uptrend. I exited as well so called growth stocks not producing income (which covers most of the NZ tech stocks). I am still holding some gold miners and (call me stupid) some oilers - they say the night is the darkest before dawn.

So far I am pretty full invested - but do intend to slightly increase cash. However - I don't think that now is the best time to sell, expect most of my shares to keep climbing at least short to mid term (but maybe I am just an incredible optimist).

In a nutshell - we might need to do a bit more rowing over the coming years (vs plain sailing), but so far I don't see a sign for the world as we know it to end.

winner69

17-01-2016, 01:03 PM

1 - NZ shares been rerated over the last few years. NZ market PE now higher than global average (so says AMP Capital)

2 - Dividend growth in NZ has been significantly higher than earnings growth (sustainable?)

3 - The beta of the NZX over global shares is about O.6% (monthly) . Global shares go up/down 1% NZX goes up/down 0.6%

4- Trends take much longer to play out then one thinks.

5- Seen it all before

Just 5 things I have noted lately - don't ask me what it all means except that if world markets collapse the nzx will be affected to some extent

BIRMANBOY

18-01-2016, 04:49 PM

Here are 5 things I've noted W69
(1) NZX is one of best performing exchanges in Asia Pacific region. Most of the others over a 2 year period have been in the minus 9 to minus 15 % whereas NZ is in plus territory.
(2) Dividend growth in NZ has ALWAYS been higher than most so reasonable to believe its sustainable.
(3) Less volatility is good for investors and bad for traders...we are investors[:)
(4) Trends are like pieces of string....they vary..so a bit pointless thinking about them.
(5) True... cycles will go around.... world markets wont collapse they will cycle as they have always done... .unknown factor of course is how long of a duration. Bottom line is now, as opposed to previous major collapses, there is a S..t larger amount of money churning around and the LAST place the smart(well big anyway) money will want to be is sitting on the sideline with cash.

1 - NZ shares been rerated over the last few years. NZ market PE now higher than global average (so says AMP Capital)

2 - Dividend growth in NZ has been significantly higher than earnings growth (sustainable?)

3 - The beta of the NZX over global shares is about O.6% (monthly) . Global shares go up/down 1% NZX goes up/down 0.6%

4- Trends take much longer to play out then one thinks.

5- Seen it all before

Just 5 things I have noted lately - don't ask me what it all means except that if world markets collapse the nzx will be affected to some extent

Baa_Baa

18-01-2016, 06:34 PM

@W69 and @Birmanboy ... but what are you doing about it, sounds like you're thinking same old same old, been here before, survived in spite of it and the tried and true will see you through? Though I'm guessing cos you didn't say.

BIRMANBOY

18-01-2016, 08:53 PM

If you are a trader, which I am not (apart from my play around trade a/c), then I can understand the importance of maintaining your capital integrity. This basis of investing continually forces one into the unenviable position of making choices based on either incomplete information, following market movements and trying to anticipate market movements. As a yield (dividend) follower its immaterial to me what the market does..it goes up and goes down and at the end of it all in all probability after 10 years it will be higher than what it is now. In the interim I pick up dividend providers in SP weakness and gradually try and get the lowest average SP I can. Running parallel to that is an income stream that keeps chunking out dividends and interest regardless of what the SP is doing. Keeping a portfolio of plus/minus 15 entities there is always a bit of tweeking here and there but over time you can smooth out the high buys and drop non believers and add new favourites. So to answer your question not doing anything but watching and will buy up more if there is decent drop. What would I do if I was basically a trader and I believed the CRASH was about to occur....maybe cash up 50-70% and have the money in a M/C 2.25% call a/c and see what develops ...but that may be never and that could last years (but I doubt it)....that's why I'm not a trader. I think its a bad use of funds (for me anyway).
@W69 and @Birmanboy ... but what are you doing about it, sounds like you're thinking same old same old, been here before, survived in spite of it and the tried and true will see you through? Though I'm guessing cos you didn't say.

JBmurc

18-01-2016, 10:08 PM

Personally I'd find it very hard not to be able to trade when I wanted or as much as I wanted ....not that it's a sure path to riches in this market or anything but I like the flexibility and protection of losses against future income tax..

I wouldn't recommend it too novice investors ...12yrs and I'm still learning to control some bad habits ..(overtrading, discipline etc )

winner69

19-01-2016, 08:17 AM

Here are 5 things I've noted W69
(1) NZX is one of best performing exchanges in Asia Pacific region. Most of the others over a 2 year period have been in the minus 9 to minus 15 % whereas NZ is in plus territory.
(2) Dividend growth in NZ has ALWAYS been higher than most so reasonable to believe its sustainable.
(3) Less volatility is good for investors and bad for traders...we are investors[:)
(4) Trends are like pieces of string....they vary..so a bit pointless thinking about them.
(5) True... cycles will go around.... world markets wont collapse they will cycle as they have always done... .unknown factor of course is how long of a duration. Bottom line is now, as opposed to previous major collapses, there is a S..t larger amount of money churning around and the LAST place the smart(well big anyway) money will want to be is sitting on the sideline with cash.

Re dividend growth. I was saying in NZ not relative to the world

Dividends in nz have grown 20% in recent years while earnings have been relatively flat.

PS- told you I didn't know what it all meant.

Baa_Baa

11-03-2016, 02:26 PM

Interesting take on Global Liquidity and similarities to 2008. http://www.zerohedge.com/news/2016-03-10/global-liquidity-collapses-2008-crisis-levels :scared:

BIRMANBOY

11-03-2016, 05:15 PM

Baa_Baa

11-03-2016, 05:25 PM

LOL BaaBoy its easy to find reasons to worry ... these types of media farts are designed to feed into peoples fears and insecurities. Bad news is always more interesting than good news. Just say no to reading them and free yourself. Any group of solid dividend earners will set your mind at rest and calm the fevered imagination.:sleep: I find if I go looking for reasons to be afraid of being in the share market its way too easy to get overwhelmed with "expert" analysis and "guru" insiders. There is a constant and never ending parade of these guys...all will be in the end selling or trying to sell something..the magical and miraculous concept of providing YOU and others the exclusive benefit of their supernatural foresight that can be provided if you sign up for their newsletter or membership.

Lol, who's afraid Birboy? Not me, I just like to keep an eye on the big picture. One part of the big picture is debt, we all know that, another key part is liquidity and velocity of money. That article caught my eye because of the similarities in capital flow around the time of the GFC, as to now.

As an aside, can you name a time in history when the NZX collapsed (capital) all of it's own accord? How about the times when NZX collapsed (capital) due solely to external markets collapsing and sentiment flowing into the NZX? Which occurred more often and which had the greatest effects? For investors who have the wherewithal and notion to manage capital, these are things worth keeping an eye on.

BIRMANBOY

12-03-2016, 03:50 PM

BaaBaa you are right in saying that markets can collapse (as well as experience unjustified rises) under pressure from market sentiment. A constant and never ending ( and always growing) mass of investors large and small all trying and or believing they can outthink, outmanoeuvre and stay one step ahead of "the rest". This is the ultimate fail point....since its impossible to know what we ourselves will do tomorrow or the next day etc..how can it be possible to know what the "market" will do? And yet investors are endlessly inventive and hard working in attempting to discover or purchase the "holy grail" i.e. which formulas or systems will allow them to get an advantage. So we have the sub-heading "preserving Capital" come up periodically. Perfectly sensible and theory tells us if we take our capital out of the market when or before it collapses and re-invest when it recovers we will be better off than someone who just leaves it in the market and watches it dropping month by month. Simple in theory but much harder in real life. False signals, dead cat bounces, bad timing, sudden reversals just make this an impossible task in my opinion. Every time you exit to preserve capital you also run the risk of making an ill-timed exit (incurring brokerage charges, possible loss of dividend, inability to re-enter because of rising price..etc. etc.) My view is that most people would be unlikely to beat the averages. Now as a dividend focussed investor I also run the risk of losing my income if I'm out of the market. Obviously if the investor is operating as a trader this is less of an issue in that divie producers are probably not on the horizon so much and I can see the desire and necessity for capital retention. Understanding that income is derived predominantly from trading is the driver that forces traders to preserve capital and attempt to get an edge somehow in understanding market sentiment. So my somewhat jaundiced view is that that traders or wanna be traders are up against it big time. Dividend investors on the other hand mostly look at capital as being the seed that has been planted and by judicial watering (buying in low points), and an occasional weeding out of non performers, the returns will take care of themselves. Companies don't pay dividends based on SP , they pay based on earnings. So its immaterial what the SP does since the normal method involves letting the capital sit. Obviously at some point the capital will need to be extracted presumably but with a lengthy period of buying judiciously hopefully the average buy in price will be such that there is no capital loss. So if you are a trader I don't rate "your" chances of "managing your capital" very highly. As a dividend investor this necessity is removed.....which ultimately makes life easier. Its always tempting to look at previous market collapses and try and draw analogies to current situation but I'm not sure that this is valid any more. Why? Share markets now are much, much larger than previously and the amount of capital involved is huge and because of inter connectivity cash is not only larger but coming from new economies. So money exiting markets will be for shorter periods and volatility will be high. Where else can you put cash? Worldwide banks and call a/cs are paying 2-3 or less %. This will keep pressure on money flowing into shares and keep the length of time out of market shorter.
Lol, who's afraid Birboy? Not me, I just like to keep an eye on the big picture. One part of the big picture is debt, we all know that, another key part is liquidity and velocity of money. That article caught my eye because of the similarities in capital flow around the time of the GFC, as to now.

As an aside, can you name a time in history when the NZX collapsed (capital) all of it's own accord? How about the times when NZX collapsed (capital) due solely to external markets collapsing and sentiment flowing into the NZX? Which occurred more often and which had the greatest effects? For investors who have the wherewithal and notion to manage capital, these are things worth keeping an eye on.