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Thread: A Primer on the Coming Crash

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    Quote Originally Posted by Rickity Plumber View Post
    Funny . . . @JustPassinThru accepts my PM's all the time.


    I wonder what the deal is?
    It may be a software bug.

    Just as I cannot post to my own blog page here, but everyone else can.

    It is what it is.

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    I wouldn't worry about junk bonds. I'd worry about all the unfunded and underfunded liabilities like pensions and social programs. These cannot reasonably expect to pay their beneficiaries as promised. When we start seeing these entities paying less than stated payouts, THAT will be the sign of a coming collapse.

    The government (and corporations) have shown themselves to be reckless in the handling of the peoples money. It's only a matter of time.
    Last edited by teeceetx; 07-17-2019 at 09:08 AM.

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    Quote Originally Posted by teeceetx View Post
    I wouldn't worry about junk bonds. I'd worry about all the unfunded and underfunded liabilities like pensions and social programs. These cannot reasonably expect to pay their beneficiaries as promised. When we start seeing these entities paying less than stated payouts, THAT will be the sign of a coming collapse.

    The government (and corporations) have shown themselves to be reckless in the handling of the peoples money. It's only a matter of time.
    The problem is, YOU may have none of these junk bonds - but if you have a pension plan, some of them may be in there. If you have an IRA managed by a major investment house, they may have exposure. Not in your accounts, but when the firm goes belly-up, the losses add up. And it's possible, these Really-Smart Investment Professionals will try, in the last minutes, to cover their crises with some illegal co-mingling.

    A massive failure will have shock-waves. Bail-Ins, where prudent investors have to take a partial loss to save the storied names of some of these companies. Funds not available. Some houses will be saved by government; and some not. Just like last time, except more-blatant this time.

    Ask the retirees who had GM stock, or Chrysler bonds, how they did. How the bankruptcy laws protected their investment - especially of the Chrysler bonds, which were PREFERRED bonds, with first dibs in a failure.

    They got nothing. And it's likely to happen again.

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    And stock prices and fundamentals have truly reached fantasy territory. Put simply...THEY ARE NOT WORTH what they are selling. The price-to-earnings ratio is way off on most of them - and in some, they don't even generate profits. Some, probably never can.

    First off you could be right, I'm no expert on stocks. But I think that we are in new territory now with the changes that Trump has made. I expected stocks to take off & they have. The one thing that always happens when stocks move is whichever way they go, they will generally go to far. In many cases I'm sure that has happened. In other cases I wouldn't be surprised if they weren't going to go up more. As for companies that don't make a profit, I understand why people invest in them but I wouldn't. Just because you can sell a lot of stuff doesn't mean that you can ever make a profit from it. Being able to sell something or even having a great product doesn't mean that you know how to make money on it.

    As far as a crash in the future, I'm pretty sure that there are a lot of them coming. I wouldn't be shocked if there was one before the election caused by democrat selling.

    As far as a complete collapse of our system, I guess that it could happen. IF so, I doubt that gold or diamonds will be a hedge against it. Instead chili & bullets would be a better investment. Gold is valuable because of it's use in making things & because people believe it's valuable. Ask a starving person what he would rather have, gold or a can of chili & my guess is chili will win every time.

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    The 6+ week war in the Straight of Hormuz/Southern Iran would push Regular Gas over 6.50 Gal. nationally

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    I'll add that doom & glum predictions sell books & they always have. And each time they predict them it either doesn't happen or it happens for a very short period of time. If I had gotten out of the stock market every time I heard doom is around the corner in the last 30 years I would have almost no money now. Remember Y2K, that was going to end society as me know it. Now I'm not saying that it won't happen, just that I don't think you can believe it every time you hear it and I don't believe that you can run your life assuming it will happen. That limits you to much.

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    There's two aspects to a crisis.

    First, there's the anarchy. That's where lead and friends will be the best guarantors of survival.

    Then, there is the reforming. The morons have starved or killed each other. People will want to trade, but what with? Precious metals became money for a reason; and will again. Nobody will want that crappy green paper.

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    Quote Originally Posted by JustPassinThru View Post
    Insanity: Now even JUNK bonds have NEGATIVE yields | Sovereign Man

    Insanity: Now Even Junk Bonds Have Negative Yields | Zero Hedge

    This oversimplifies it, a bit - and the author, Simon Black, is selling something. Nonetheless he's right on the basics - and it's an easy overview on why he, and I, and many others, think we're in for it.

    I'd invite you to try to scan over this, maybe try several times. This is why I think Trump isn't going to last or be able to stop the economic-bubble popping. He didn't make this, but it's looking like he'll be holding the bag.

    75 years ago this month, a group of 744 delegates from around the world gathered at the very posh Mount Washington Hotel in New Hampshire to build a brand new global financial system.


    The year was 1944. World War II was still raging in Europe and the Pacific.


    But with the successful invasion of Normandy well underway, the Allies knew that Hitler’s days were numbered. And they needed to start preparing for a post-war world.


    Everyone knew the US would emerge from World War II as the the dominant superpower.


    So the financial system they designed put the United States at the center of the world economy.


    They called it the Bretton Woods system, named for the town in New Hampshire where they gathered.


    And their central idea was that the value of the US dollar would be fixed to gold at a rate of $35 per troy ounce, while every other currency would be fixed to the US dollar.


    The Swiss franc, for example, was fixed at a rate of 4.3 francs per US dollar, while the Danish krone was fixed at 4.8.

    Bretton Woods ushered in a period of remarkable economic stability worldwide.


    During the roughly quarter-century that the Bretton Woods system was in place, banking crises were almost nonexistent. Recessions were rare.


    And global debt fell from nearly 150% of GDP at the end of World War II, to roughly 30% by the early 1970s.


    Then it all came to a screeching halt in 1971.


    The United States, weighed down by a costly war in Vietnam, suddenly and unilaterally terminated the agreement.


    The US government wanted the flexibility to print as much money as it needed without being forced to maintain the gold standard.


    So the whole system collapsed, practically overnight.


    And it was replaced by a new standard where unelected central bankers have supreme authority to conjure near infinite quantities of money out of thin air.


    The effects have been pretty disastrous.


    Ever since the end of Bretton Woods, global debt has skyrocketed to roughly $200 TRILLION, approximately 225% of GDP.


    Banking crises and financial shocks have become much more commonplace. Market crashes are more severe. Recessions are more common. Inflation worldwide has soared.


    (It’s ironic that, back in 1944, the price of a room at the Mount Washington was $18. Today it’s over $250.)


    Perhaps most of all, we now regularly witness some of the most extreme financial anomalies imaginable.


    And one of the most obvious examples of this is negative interest rates.


    In a number of countries, including Switzerland, Japan, Denmark, and the entire Eurozone, central bankers have printed so much money that interest rates are actually negative.


    If you buy a TEN YEAR German government bond, for instance, your annual investment return will be NEGATIVE 0.27% per year, based on this morning’s rates.

    That’s insane.

    But just a few days ago the insanity reached a whole new level.


    According to the Wall Street Journal, there are now some JUNK BONDS in Europe that have negative yields.


    Think about this: a junk bond is basically debt issued by a company with financials so risky that analysts expect there’s a good chance the company won’t pay its debts.


    Hell, the company might not even be in business by the time the debt matures.


    And yet, despite these substantial risks, investors are willing to loan money to these companies… at NEGATIVE rates of return.


    Seriously?? You take all that risk and then GUARANTEE that you’ll lose money.


    Honestly I’m not a pessimistic person. But this sort of absurdity makes me pause and consider what might happen next.


    The global economic expansion is one of the longest on record, ever. Financial markets around the world are soaring at all-time highs. Stocks. Bonds. Real Estate.


    One of the only things we know for sure about financial markets is that they are ALWAYS cyclical. Up/Down, Boom/Bust. These cycles have been with us forever.


    It’s impossible to predict exactly WHEN the decline will occur. But when you see JUNK bonds with NEGATIVE yields, it’s likely that we’re probably close to the end of the boom phase.


    It’s possible this madness could continue for a while longer. Or it could end tomorrow.




    hmmm........that mean my "Dollar General" and "Everything's A Dollar" stock is going to lead to a Wall Street, international collapse of the financial markets of the world when their stock falls? Perhaps in science what goes up must come down, but there isn't any guarantee that a financial boom, as we are experiencing under President Trump for the past three years, is going to come crashing down despite people predicting it.

    Money and markets operate on some very simple economic principles: Supply & Demand; Confidence in the economy and currency, and the U.S. dollar has remained the reserve currency of the world for over the past 45-years, nobody is near it; and velocity - how fast, and how much money is placed into circulation regularly.

    Velocity is what greases the wheels of the economic system - if the Federal Reserve, not a part of the U.S. Government but an independent agency in control of currency and interest rates, routinely continues to raise interest rates, as they have four times in two years in trying to stymie the Trump economic recovery, based on - well - nothing but the possibility that because Wall Street and money markets tend to fluctuate then the system is flawed and economic theory doesn't matter.

    The Trump economic boom can go on for ages for all we - or the money changers know. Nothing has slowed it much yet. Remember, you have a man in the White House for the first time who actually understands money and economics.

    Stan
    Last edited by Stan Fan; 07-17-2019 at 10:00 AM.

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    It doesn't matter in the least.

    The very same people who howl at the impending doom and imminent crash...and just as loud had been constantly lamenting about the impending doom and imminent crash - because of the can being kicked down the road.

    For liberals/progs/Dems or even anti-Trumpers...anything based on fear potential, of what could happen, might happen, will definitely some day happen - in the midst of a roaring economy, where the can is at least having an attempt made of not being kicked down the road...and going to find it all grist for their mill.

    Whether it be selling books, or engaging in potential fear smearing President Trump.
    Last edited by Canadianeye; 07-17-2019 at 10:11 AM.
    The Progressives have become full blown NAZIs, to thwart a Hitler that doesn't exist...since that is the only way they can express, and self justify, their fascism.

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    Quote Originally Posted by JustPassinThru View Post
    There's two aspects to a crisis.

    First, there's the anarchy. That's where lead and friends will be the best guarantors of survival.

    Then, there is the reforming. The morons have starved or killed each other. People will want to trade, but what with? Precious metals became money for a reason; and will again. Nobody will want that crappy green paper.
    All the gold and silver under the control of the United States government, is already pledged against the national debt and Social Security. You can't purchase significant amounts of either privately because it isn't available for private sale. We went off the gold and silver standard's decades ago. The government can't even borrow against stored gold and silver, because it is already reserved for those reasons. Our dollar is valuable, simply on America's reputation and its face value, and you won't find bills that are imprinted with Silver Certificates, only Federal Reserve Note now.

    Yet, even going off of the gold and silver standard backing, the American dollar still, and has for a long, long time, remained the reserve currency of the world. No nation even comes close to it. Not China's currency; Japan's'; the Euro-Dollar; the British Pound Sterling, nobody.

    If China want to buy Iranian oil, they have to deposit the monies in the World Bank, or the Ex-Em Bank, not sure which, and change it to American dollars, otherwise, no deal. The confidence in the American dollar throughout the world is simple - most people believe that America and its economic engine of invention, trade and purchasing consumer power, will be around and still solid 50-years from now, as it has been for almost the past 50-years.

    Countries like China can manipulate their currencies in an effort to interrupt that confidence in the American dollar, or the Fed can do it themselves, but 50+ years from now, nobody is going to be using Chinese monies as the reserve currency of the world. BTW, a good read on the Wall Street Stock Market is when the numbers go up, jobs are being created, not eliminated, and that is always good for America, and what President Trump promised would happen.

    Stan
    Last edited by Stan Fan; 07-17-2019 at 10:37 AM.

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