Global Debt Time Bomb explodes soon

[drunkensurvivor]

Is this the day it will happen?

The USD Index TANKED at the Asia open, and continues to go down - now 1/2 way through the session. What happens when EUROPE opens?

I'll be up at 5 am to see, and listen to the BBC. If it continues to 6 or 7 am, I'll be at the ATMs getting the max out, and at the bank door at 9 am to get the rest (if they open).

No this is a routine market flux and the other market indicators are not moving wildly.

Here is a link to the TED spread:

Expand the chart to the 3 year view and then look at the TED spread on October 8, 2008. This was the peak of the liquidity crisis and then see where we are today.

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND


Then go look at the S&P 500 on the same day here Oct 8, 2008:
http://www.google.com/finance?q=INDEXSP:.INX

Then go here and look at what GLD was doing at this time frame October 8, 2010.
http://www.google.com/finance?q=gld

Then this shows the volatility index compared to the NYSE indexs. Note the VIX is up radically and the prices down as everyone is selling.

http://finance.yahoo.com/q/bc?s=^VIX&t=5y&l=off&z=l&q=l&c=^GSPC,^IXIC,^DJI


When you see events like this you should be shitting a brick, not on a minor currency swing.

I am not saying things are wonderful and we need to hold hands while singing a chorus of Kum Ba Ya, only that this minor swing in currency is just that a minor swing. You will know the BIG ONE when you see it.

Good post, I would also add that paying attention to treasury auctions is very important... pay a lot of attention if demand for treasuries falls and rates spike up, and pay attention to who is buying treasuries(especially if the Federal Reserve steps in rather quickly and aggressively, in contrast to the types of planned quantitative easing that is in the works now ). In fact, if we are talking about a debt related dollar crisis, then I think treasury rates might be more important than all of the above(price of gold is important though).

[raptor]

Thanks.

I am going to add a link to a page I routinely check when I see the market going weird during trading hours. It has a currency, gold/silver, oil, Ted Spread and T-bills all on one page.

http://www.chrismartenson.com/money_and_markets

Note the currency charts are inverse charts in relation to the USD while the top chart is an upright chart.

[Mister Dark]

http://www.chrismartenson.com/money_and_markets

Bookmarked. Nice to see it all piled together like that.

[krazykracker]

I agree, all of the experts are saying the same thing. The collapse is coming soon.

[WhoShotJR]

And as I pointed out in February of this year, the U.S. runs the risk of going the way of the Habsburg, British or French empires:

Leading economic historian Niall Ferguson recently wrote in Newsweek:


Call the United States what you like—superpower, hegemon, or empire—but its ability to manage its finances is closely tied to its ability to remain the predominant global military power...

This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force...

If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power.v

http://www.washingtonsblog.com/2010/09/united-states-joint-forces-command.html

[Pondo_Sinatra]

I didn't see this discussed yet, so I thought I'd post it here for your consideration.

The Hindenburg Omen.

The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.

The rationale is that under "normal conditions" either a substantial number of stocks may set new annual highs or annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble.

Now, I don't know crap about finance, and I see articles both supporting and debunking the omen. There are persuasive arguments on both sides of the fence. But given that the omen was just tripped again recently (August 23 WSJ article) AND the current economic climate overall, I don't take this as a good sign.

[pyratemime]

I didn't see this discussed yet, so I thought I'd post it here for your consideration.

The Hindenburg Omen.

Discussed in detail here.

[Pondo_Sinatra]

I didn't see this discussed yet, so I thought I'd post it here for your consideration.

The Hindenburg Omen.

Discussed in detail here.

Thanks for the pointer; I was only looking in this thread.

[raptor]

A link to a good thread worth reading.

http://www.shadowstats.com/article/hyperinflation-2010

I do not agree with everything in this and it was drafted December 9, 2009 and the world has changed since then.

I offer this only as additional information. I am not saying they are right or wrong or that hyperinflation is about to occur.

[WhoShotJR]

Article about gold that is relevant to this thread.

The truth is the United States Treasury must refinance 36 percent of the debt this year and 60 percent by 2013, and unlike Greece who can’t print money to refinance their obligations, the United States Federal Reserve has no such restraints.

The Fed’s balance sheet grew from $850 billion in 2007 to $2.3 trillion in 2010 because they created money out of thin air and bought mortgage related securities off the balance sheets of the banks. Many of these bonds are now coming due, and sure enough, the Fed will use the proceeds to buy more government bonds to keep interest rates artificially low and facilitate business activity. If the average citizen did such a thing, he/she would go to jail.


The public was told that the extra liquidity would be lent to small businesses and consumers to stimulate the economy, but why would the banks lend money to the public at six percent when they can buy a risk-free government bond at three percent?

The reason we haven’t experienced high inflation is because the printed money hasn’t been released to the economy. Instead, it’s being returned to the government so Congress can pay for entitlement spending and the military costs, which collectively account for two-thirds of the budget.

How long can that last? The notion that our creditors will allow us to repay runaway national debts with an increasingly diluted currency is intellectually lazy, and quite frankly, a breach of logic.

The large banks used to buy one percent of the 10 and 30 year treasury bonds; now they represent 24 percent of the demand. Hedge funds now account for one-fifth of all trading in the U.S. Treasury bond market, up from three percent in 2009.

There’s no doubt that if the demand for government bonds dramatically declined it would put tremendous downside pressure on the value of the dollar and correspondingly increase the price of precious metals. So what would prevent institutional investors from building a position in gold with the intention of forgoing government debt purchases in the future?

Better yet, why wouldn’t they do it?

John Paulson, who made a cool $1 billion in the deal that begot the SEC fraud case against Goldman Sachs, would be the wealthiest man in the world if gold reached $5,000 an ounce, having invested 10 percent of his $30 billion hedge fund in gold related securities.

Gold is also the largest holding for George Mindich’s $13 billion hedge fund, himself a former partner at Goldman Sachs.

George Soros, the 15th wealthiest man in the world after he made $1 billion betting against the British pound in 1992, was quoted as saying “gold is the ultimate asset bubble” in December of 2009.

Unbeknownst to many investors, he’s also the 6th largest owner of gold.

http://www.cnbc.com/id/39345521

[princess76]

Global debt can affect people's life. It drains substantial funds out of the business that could otherwise be invested in job creation and entrepreneurial expansion. So I was just thinking that global debt is like time bomb that can explodes anytime soon.

[raptor]

This is not exactly on topic but it is close enough.

Paper gold has risen from a curiosity to an incredible level. Some of this growth is due to fear of the market and inflation. Certainly speculators are a part of this rise. Others simply are looking for a hard and physical storage of value.

The ETF GLD currently has a market cap of $54,869,679,694.15 with some 1,305.69 tons of gold in storage. That means they GLD is the 6th largest owner of gold in the world. Their gold holdings eclipse China, Switzerland, Japan and Russia. They have about 2.5 times the amount of gold that the European Central Bank holds.

The top 5 gold owners are US 8,965.65, Germany 3,754.29, IMF 3,311.84 tons, Italy 2,701.9 tons
and France 2,683.81 tons.

http://247wallst.com/2010/09/30/gold-me ... -pall-slv/

[Blacksmith]

Physical gold has gone through a few scarce spells. It is still being bought up like crazy. I am thinking it still has a way to go before it tops out. Some people thought I was crazy when I bought a lot at $850. Seems sound now.

[raptor]

An interesting Chart of the Day. It shows job decline and growth during 3 time periods.

http://www.chartoftheday.com/20101008.htm?T

[Vicarious_Lee]

An interesting Chart of the Day. It shows job decline and growth during 3 time periods.

http://www.chartoftheday.com/20101008.htm?T

How is the DOW above 11,000 now? Wh found that many people to get all excited about the economy?

[phil_in_cs]

How is the DOW above 11,000 now? Wh found that many people to get all excited about the economy?

1. The DOW is dollar indexed, so as the dollar loses value the index goes up with inflation.
2. As bad as it sucks here, it sucks worse in other places and they are investing here.
3. 401(k) money flows in every month like clockwork. For people with very long times until they retire, that's still a sensible place to put the money.

[Blacksmith]

An interesting Chart of the Day. It shows job decline and growth during 3 time periods.

http://www.chartoftheday.com/20101008.htm?T

How is the DOW above 11,000 now? Wh found that many people to get all excited about the economy?

The word on the street is that the FED is getting ready to buy an ass load of bonds because of the crappy employment picture. This is already pushing yields lower and making stocks look good by comparison. Also all the currency devaluation over the last year has definitely impacted the market.

[raptor]

How is the DOW above 11,000 now? Wh found that many people to get all excited about the economy?

1. The DOW is dollar indexed, so as the dollar loses value the index goes up with inflation.

Bingo! Gold and silver are rising and the US dollar is losing value to the Can $, Aus $, Yen and even the Euro. The dollar index is down over 10+% since July.

Some investors see certain (not all stocks) as a dollar hedge.

Check out how these have risen in the last month: FCX, RTP, CVX, TNH and LINE.

[Old_Man]

I wasn't sure where to put this....
Not being covered in the news is a huge spike in commodities prices.
Oats, soybeans, corn and wheat futures all spiked today as Helo Ben gets his wish of dollar devaluation creating inflation.
All the charts...
http://market-ticker.org/akcs-www?post=168582


Yikes!

[Blacksmith]

Not being covered in the news is a huge spike in commodities prices.

I am not sure what you mean about "not being covered in the news". The Russian crop failure and massive fires have been all over the news. Just not as much in the US news. Food riots in India, Pakistan, Russia. I'd say it has been covered. If you don't have your food supply squared away by now, it is getting into the "too late" zone.

It think there is a thread or two in this forum.

[Old_Man]

Not being covered in the news is a huge spike in commodities prices.

I am not sure what you mean about "not being covered in the news". The Russian crop failure and massive fires have been all over the news. Just not as much in the US news. Food riots in India, Pakistan, Russia. I'd say it has been covered. If you don't have your food supply squared away by now, it is getting into the "too late" zone.

The price spike was just yesterday only...in a matter of seconds. This has nothing to do with foreign country news and everything to do with the devaluing dollar and low grain forecast in the US. The market is rising and the dollar falling...this is looking more like Zimbabwe.
http://www.commodities-now.com/news/general/3754-grain-prices-surge-as-us-slashes-forecast.html

[Molon Labe]

Not being covered in the news is a huge spike in commodities prices.

I am not sure what you mean about "not being covered in the news". The Russian crop failure and massive fires have been all over the news. Just not as much in the US news. Food riots in India, Pakistan, Russia. I'd say it has been covered. If you don't have your food supply squared away by now, it is getting into the "too late" zone.

The price spike was just yesterday only...in a matter of seconds. This has nothing to do with foreign country news and everything to do with the devaluing dollar and low grain forecast in the US. The market is rising and the dollar falling...this is looking more like Zimbabwe.
http://www.commodities-now.com/news/general/3754-grain-prices-surge-as-us-slashes-forecast.html

All things considered, I agree with Old_Man. Things are looking like we're in the HOV lane to FAIL.

[Blacksmith]

The price spike was just yesterday only...in a matter of seconds.

Well, lets see. At 0830 in the morning the USDA released their World Agricultural Supply and Demand Estimates report. And it said:

U.S. wheat ending stocks for 2010/11 are projected 49 million bushels lower this month with lower estimated production and higher expected feed and residual use. Production is lowered 41 million bushels based on the Small Grains 2010 Summary report. Feed and residual use is raised 10 million bushels on higher-than-expected disappearance during the June-August quarter as indicated by the September 1 stocks. Higher carryin with small upward revisions to estimated 2009/10 production and ending stocks are partly offsetting. The 2010/11 season-average farm price is projected at $5.20 to $5.80 per bushel compared with $4.95 to $5.65 per bushel last month.

So supply goes down, demand goes up, I wonder what happens next with prices? This is hardly rocket science.

[Old_Man]

Anyone in France? I hear massive strikes are on with some 3.5 million in the streets.
http://www.telegraph.co.uk/news/worldnews/europe/france/8059957/French-strikes-3.5-million-take-to-streets-to-protest-pension-reform.html