This is a great link. Interesting stuff on this site. very useful...
A gift. Thank me after you get rich.
- Thread starter BrandNewTrader
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This is a great link. Interesting stuff on this site. very useful...
Quote from 2cents:
ok so the revised is 2.9% (from 2.5% advance estimate)... what are roub's options now to look a little less... stupid?... say the figure is cooked i guess
This is a perfect mini-example of Panglossian optimism. If you will allow me to use your comment as an example. i know it wasn't a complete argument or serious assertion and is just a comment, but it's a good example of how the media would posit the revision to the public. They can spin this like they spin everything.
a 0.4% upward revision in the Q2 GDP growth from 2.5 to 2.9 has limited optimistic value, given Q1 GDP came in at 5.4%. The evidence of the significant slowdown is now cemented. The upward revision means nothing. GDP growth slowed significantly between Q1 and Q2.
What's next? I'll summarize.
The media and their talking head interviewees said "housing cooling". Then they said "housing slowdown" - now they are realizing it's a BUST. What are they going to say when the housing market collapses under its own weight? Haha...
Next come the personal mortgage defaults and personal bankruptcies as housing values plummet and consumers FOLD.
This will be followed by housing/mortgage lending/banking crises in the form of defaults, bankruptcies, and possible dislocations in the credit markets. Who owns the tens of trillions in MBS? Haha.. pension funds and retirement funds. Ugly! Really really sad and ugly.
This credit crunch could be what leads the market to severe correction or possibly a mini crash/ big crash.
Did you know the Fed is trying to soften the landing by printing dollars in high gear? They're doing it right now as we speak. Problem is, it won't soften the landing. It will only lead to more inflation in the system and more dollar weakness. They might even be making things much worse, but this mistake may not become apparent until the end of next year when we are in the midst of a recession and inflation begins to CLIMB! haha... can you say "OH SHlT"???
rEAL UNDERLYING PROBLEM IS THE fED POLICY. iT'S BASED ON kEYNES (sorry) economics. But Keynesian theory was PROVEN incorrect in the 90's when we had inflation during a recession. Keynesian theory says that this is impossible, but it happened, and will happen again because the Fed still follows Keynes' theories.
Read that paragraph again. It iS fact. This is why the Fed DOESN'T KNOW WHAT TO DO. Their "data dependency" is political cover and downright smart. The shit is hitting the fan slowly and THEY know it, but they don't want to be responsible. even though they are ultimately responsible, based on their easy money policies after the tech bubble crash. The Fed creates booms when Fed bubbles pop under their own weight. The boom bust cycle is due to Fed intervention. Fed intervention is subject to influence from government and politicians. Politicians don't understand economics or "public good". They are just regular people! All they care about is staying in power. How do they do that? Make promises to special interests in the form of appropriations/legislation/tax loopholes in exchange for big campaign money. This campaign money hires marketers, pollsters, and pays for ALOT of suggestive advertising and polling.
Come on people. Look at what happened during the tech bubble. The sell-side was RAPING the public in the months preceding the bubble bursting. The sell-side (investment banks, media, mutual funds to a degree) is only interested in SELLING the public on buying securities. The more we invest, the higher the market goes. This won't change. They will continue to trumpet the panglossian optimistic view until the very day the market crumbles under all of the accumulated and sustained pressure that is currently piling on.
And after the crash the talking-head interviewees and show hosts will still smile and call it a "buying opportunity" !
Anyway... nothing's changed. In fact, I added to my housing positions and am now looking for good put plays in the mortgage lending/financing/banking sectors. Especially mortgage lenders, some of whom may collapse completely under the weight of the coming housing bust and complete deterioration of growth in the lending market. Just think 80's SNL crisis, and you get an idea of what might be in store for our mortgage crooks in the next few years. No joke.
One very interesting question that could lead to a good play is "which one of the big investment banks is overexposed?" Is it the banks who are heavily dependent on prime brokerage revenue from hedge funds (most of the big boys)? Or is it the banks who are heavily dependent on MBS-related revenues (Lehman, Deutsche, etc)? Or is it the guys who are taking all the trading risk? (Goldman). Or how about ALL of them since they're so overexposed in the Credit market? The right put plays on the right banks could have very very attractive risk/reward profiles.
This is all my opinion, based on the research of others. I could be very much wrong. But I highly doubt it.
I am not some quack or some "doomsday eeyore". Too many people pay attention to the talking heads on TV and not enough attention to the real independent economists (who don't work for big sell-side institutions) and independent market professionals who have between 20 and 40 years of market experience individually and maintain amazingly informative blogs and websites. For an example of what I'm talking about - checkout www.nizenotes.com and www.billcara.com.
This is a market and people will have contrasting views. And i'm sure i don't need to remind anyone that if you're trading your own money, then you should be very careful when listening to the words of someone who is speaking from a sales perspective. The sales perspective completely destroys any semblence of objectivity. I worked on the sell-side and it is a real thing. The sell side does not care where the market is going, it's their job to SELL the market to YOU. Their prop desks DO NOT publicize their strategies or market views. This is why everything is SPUN.
Next time you watch bloomberg/cnbc/msnbc/any bullshit financial show on TV, remember, they're spinning you like a fcking merry go round. You guys are (supposed to be?) traders, not armchair investors or "crack speculators".
I think the main difference of opinion stems from the fact that trading is traditionally very much focused on the short-term while speculators have longer time horizons, and investors even longer. I think this is the underlying fundamental difference between myself and everyone who has disagreed with me on this site. The disagreeing arguments are rarely supported by market data or sound logic. I guess I can't hold anyone responsible for not being able to see past the next economic or earnings report.
It all makes sense now.
Thoughts?
and economists have zero cred so he still has zero cred. What he is predicting is an aborted business cycle. I am trying to find an example of an aborted business cycle, from memory..... ok, in 1937 there was a little rally but it died out... that is the only one in recent history and that followed a worldwide, deep, deep depression that drove millions of people back to subsistence farming. We have some high oil prices and some idiots that will say we are in a depression anytime a conservatiive is in office but beyond that there is no evidence that we are now following a terrible depression and little reason therefore to expect a recession. Time will tell of course, I am from the cycles school and believe it to be the elegant solution to economic predictions but you never know.
You're entitled to your own opinion, but I'm afraid your opinion may be based on flawed logic.
"economists have zero cred, so he has zero cred..." I'm not sure i understand this. You mean they have zero cred in making market calls? i might agree. But he isnt making a market call, he's making an economy call. And since when was this all about roubini anyway? He isn't the only one making this call... Besides, you're fooling yourself with this whole "zero credibility" deal. There are alot of diff economists out there and they all have diff views of how things are working, and how they should work. To lump them all together is oversimplification of a complex matter. The goal is to figure out which school of economists has the most accurate view of reality and the current behavior in the international financial arena. By doing this, you can get a better grasp on what's supposed to happen within a particular market. If you discount all economists, you might as well discount fundamental analysis. That leaves you with technicals, and technicals are only half the story. Where are you coming from buddy? Highschool?
What's this about an aborted business cycle? I don't follow that either. How can you abort a business cycle? A cycle is a progression of repetitive events. Are you saying that roubini is predicting a fundamental change in global economics and a new age in human existence? Or are you saying that roubini is predicting the end of the expansion and the onset of the next recessionary phase in the business cycle? Roubini is predicting that the next phase of the business cycle has begun - that cycle being recessionary - and its arrival has been hastened by the bursting of the housing bubble. I don't know what you are talking about when you say "abortive business cycle". There's nothing unusual about a business cycle that peaks and then begins to contract, or "recede".
"We have some high oil prices and some idiots that will say we are in a depression anytime a conservatiive is in office but beyond that there is no evidence that we are now following a terrible depression and little reason therefore to expect a recession."
Wow. I don't know where you're going with the first half of that statement, but as far as your severely flawed logic in regards to depressions and recessions... Who's predicting a depression? What the F are you talking about fool? And why base your analysis of a coming RECESSION on the probability of a coming DEPRESSION??? Shouldn't it be the other way around? Shutup.
"The cycles school as elegant solution to the economic predictions ? Again, what are you saying? Aren't business cycles based on economic theory? I don't follow your arguments...
Was this like an attempt at a cheapshot or something? When you ASSUME, you make an ASS out of U and ME.
You're free to do as you please, but don't put words in my mouth and think before you respond to one of my posts, as I usually try to put some thought behind my posts.
Why are there so many people on this site who think they know what they're talking about. But DON'T? Why do I have to write a thesis with proofs everytime I post b/c there are people waiting in the wings to INCORRECTLY point out something wrong with my thought process? I'm getting tired of it...
I know what I know, I also know what I DON'T know. And I don't get the two confused.
roub's a desperate permabear... i think his PR plan B: stagflation lite, has more chances to materialize... but he is only floating that idea for damage ctrl purposes... here's an informed view on roub' fyi http://www.elitetrader.com/vb/showthread.php?s=&postid=1178176&highlight=strangelove#post1178176
look, I am not going to educate you about business cycles. This economist/guru/permabear is saying that an event, a recession, is going to happen immediately on the heels of a housing bubble and that just does not happen historically. If it did it would be a prematurely ended cycle, more things usually happen between a housing boom and a recession, aborted means "prematurely ended".
I said that an aborted business cycle happened only when the world was trying to recover from the great depression and we don't seem to have had a great depression recently though there are always idiots shouting depression and there are always perma bears with dire, dark predictions like the econ guy. I don't see how you twisted that into the view that I was predicting a depression!! I just don't see any reason for things to be different this time other than we are struggling with oil prices, which are headed down currently I hear, people are talking about $2 gas.
I believe Roubini addresses your argument directly in this link. The belief that we can't have a recession triggered by a housing bust is "spin" as Roubini puts it, and he details his counter-argument in the above link.
I'd be interested to hear your reply?
He addresses your argument in Spin #2
http://www.rgemonitor.com/blog/roubini/143257/