Most Asian Markets Are In The Red As The Global Selloff Continues

TBI ^ | 10-3-2011 | AP

[blam]

BANGKOK (AP)

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Click here to see the results from all the Asian markets.

[PGalt]

Thanks for the link/post. Interesting.

[blam]

“Greek Default Will Trigger an Immediate Magnitude 10 Earthquake”

If someone knows the truth, it is the guy at the top of UniCredit [Szalay-Berzeviczy], which we expect to promptly trade limit down once we hit print. Among the stunning allegations (stunning in that an actual banker dares to tell the truth) are the following:

“The euro is “practically dead” and Europe faces a financial earthquake from a Greek default”… “The euro is beyond rescue”… “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits.”….”A Greek default will trigger an immediate “magnitude 10” earthquake across Europe.“…”Holders of Greek government bonds will have to write off their entire investment, the southern European nation will stop paying salaries and pensions and automated teller machines in the country will empty “within minutes.”

In other words: welcome to the Apocalypse…

[Oceander]

An older image that still bears some relevance to the subject:

[RayChuang88]

This is why I think this scenario will play out in the stock market:

1. The Eurozone collapses by the middle of October 2011, and the DJIA nosedives to the 7200-7500 range.
2. Through what feels like Chinese torture, DJIA drops to an absolute minimum of 3500-3700 by April 2012.
3. DJIA eeks back gains to 5500 by November 2012--but it's too late: Obama is defeated by the biggest loss for a sitting President since 1980.
4. With Obama's defeat, DJIA "pops" to nearly 7000 as President-elect announces major measures to streamline government, expand domestic energy production and do the biggest overhaul in income taxation since the passage of the 16th Amendment.
5. Within 100 days of Inauguration Day 2013, the laws that will begin the government streamlining process and the income tax overhaul are signed, with the new income tax laws retroactive to January 1, 2013. DJIA will begin a steady climb that takes it past 10,000 by the end of 2013.
6. By summer 2015, DJIA will be testing its historic highs as businesses revive from more friendly regulatory and tax law environments. Particularly strong will be the energy sector.

[Frank_2001]

WHY were they even allowed to join the EU in the first place? Aside from gyro sandwiches, wine and tours of old buildings, do they produce anything that the rest of the world will go out of its way to buy????

[blam]

Boy! You’re optimistic. No civil war to be found anywhere in your forecast.

[MileHi]

Boy! You’re optimistic. No civil war to be found anywhere in your forecast.

That is probably step 1.5 in the sequence.

[Mariner]

You're thinking the political dynamics and tax/regulation law can turn around this deflation driven by enormous, unprecedented debt.

You're wrong.

Only massive bankruptcies can begin to clear the system. It will take more than a decade before we see growth again.

[RayChuang88]

I'd almost agree, but if you look at what happened after the 1929 stock market crash, what made it worse was the passage of the Smoot-Hawley Tariff, which pretty much killed off international trade between the USA and other countries and really sent the US economy tumbling to its 1932 depths. And FDR's policies effectively prolonged the Great Depression unnecessarily, too. Indeed, it's been said that if we had let the "natural forces" of the economy work and never passed the economy-killing Smoot-Hawley Tariff, the US economy would have recovered completely by 1936.

As such, why do you think the Tea Party movement started up? Their mantra of streamlined government with smaller size, less obsolete/unneeded regulations, and overhauling national taxation to make it way less intrusive on running a business, will mean the USA--if we elect a President in 2012 that supports this view--will likely be the first country to recover.

Remember, the USA is sitting on some of the world's biggest coal reserves, a huge reserve of oil shale, and we've barely touched the offshore oil within 200-300 miles of the Atlantic and Gulf of Mexico coasts of the USA and off the northern coasts of Alaska. As such, with the right policy in place we could completely become self-sufficient in petroleum product consumption again--and that's not including research into make motor fuels from oil-laden algae, which will mean using a renewable resource to make motor fuels!

I've seen what's happening now before--1979 and 1980, the last two years of the Carter Administration. But yet, when Reagan came into office in 1981 within three years the US economy was booming again.

[mick]

Both your comments bring to mind my favorite quote from another time about how economies heal themselves. The prescription may sound heartless today in our feel good fantasy culture but it is the only way out that truly cleanses the system and allows for new growth to begin...and in the end it will happen one way or the other.

Secretary of the Treasury Mellon had only one formula: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”... (Source: U.C. Berkeley Economist Brad De Long).

[RayChuang88]

What I find interesting is that the Panics of 1837, 1857, 1873, 1893 and 1907--because there was no massive government intervention in all these cases--"worked themselves out" within 5-7 years.

But the Great Depression was different. First, the Smoot-Hawley Tariff with its 30% rate effectively killed a huge fraction of international trade, and that sent economies around the world reeling (the USA by the late 1920's was already a major international trading partner). Secondly, FDR's New Deal policies warped the economy even further, in effect prolonging the Great Depression even more. I remember reading a report stating that if we had let the natural economic forces "work out" the effects of the 1929 stock market crash (which as in many ways just as bad as what happened in the Panic of 1893) would have ended by 1936 at latest.