The soft depression that we had to have

N

nonrecourse

Three hours ago Lehman Brothers announced it is filing for bankruptcy and Merrill Lynch has been sold for peanuts to the bank of America see link;

http://www.abc.net.au/news/stories/2008/09/15/2365006.htm?section=justin..willair

I'm sorry to say that my worst fears are coming true 3 of the top five U.S. investment banks have now failed or taken over in firesales in the last few months


http://www.theaustralian.news.com.au/story/0,25197,24347745-12377,00.html

In the next six weeks we will see a world wide collapse of sharemarkets. The ASX will probably fall to 3500
 
that's a big call considering the ASX has to get thru massive support at

4650
4550
4350
4250
3950
3550

and all the little blips in between.

i think we will see a collapse of the US stock market, which will drag down our stock, but not collapse it.

as the UK market tanks along with it both the greenback and the pound will get hammered.

our currency will suffer as well, but i don't think the consequences will be as dire here.

if the entire world's stock markets collapse then the call for the gloabl currency will ramp up and the final 4 stages of the NWO plan for global currency will begin.
 
nonrecourse said:
Three hours ago Lehman Brothers announced it is filing for bankruptcy and Merrill Lynch has been sold for peanuts to the bank of America see link;

http://www.abc.net.au/news/stories/2008/09/15/2365006.htm?section=justin..willair

I'm sorry to say that my worst fears are coming true 3 of the top five U.S. investment banks have now failed or taken over in firesales in the last few months


http://www.theaustralian.news.com.au/story/0,25197,24347745-12377,00.html

In the next six weeks we will see a world wide collapse of sharemarkets. The ASX will probably fall to 3500
Click to expand...


I remember that I had a gut feeling similar to yours in March, when Bear Sterans was about to collapse. Gold was above $1000 USD and it felt like the "end of the world". Now Lehman are bigger than Bear Stearns, there is anxiety but there is no panic. It is all priced in. Gold is cheaper, markets are down but not as down as would be if Bear Stearns sale was not subsidised by the Fed in March.

Either somebody is holding markets up and gold down (conspiracies, I don't believe in them), or the bad news are already priced in so well that Lehman is not such a cardinal issue.

Six weeks - it is a short period of time. It would not surprise me to find ASX at 3500 and not even at 2500 late next year, but six weeks is a daring prediction. If you are so sure take some short index positions in CFD's, reward yourself :D.
 
Lets see how the US goes today.

1 hour and 18 minutes to NYSE market open. Theme tune today: something by Metallica. How about enter the sandman - off to never never land...
 
big call but i don't aggree , per haps, 4100, at max, must say i don't mind droping 15% of my home ,in comparison to the rest of the world markets,
 
The truth is depressing

For the past year on this site I have been warning people not to borrow too much and get their financial house in order. The general response to my posts has been that I am a doom and gloom merchant:(

I guess because I am 55 and have lived through 4 recessions I knew this one is different. Yes I know you still don't believe we are headed for a soft depression:confused: I really do wish I was wrong and SS doubters were right read this link and weep;

http://thescotsman.scotsman.com/latestnews/-How-the-Masters-of.4494032.jp
 
are you gloating?

i think we're IN a soft depression now - i'm no D&Ger tho. what are you waiting for to admit it? figures?

i see this as a great time to get into holding land, because as populations swell, they ain't makin' any more of it.

i'll be visiting TC idea about buying ag land soon.
 
Blue Card! said:
i think we're IN a soft depression now
Click to expand...
What IS a soft depression ?

According to wiki
In economics, a depression is a term commonly used for a sustained downturn in the economy. It is more severe than a recession (which is seen as a normal downturn in the business cycle). Considered a rare but extreme form of recession, the start of a depression is characterized by unusual increases in unemployment, restriction of credit, shrinking output and investment, price deflation or hyperinflation, numerous bankruptcies, reduced amounts of trade and commerce, as well as violent currency devaluations. There is no official definition for a depression, even though some have been proposed. Generally it is marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced given current resources and technology (potential output). One could say that while a recession refers to the economy "falling down," a depression is a matter of "not being able to get up."
Click to expand...

Current thinking is that the US is probably in a recession already, Eurozone may enter recession with 2 quarters of v. slightly -ve growth. There's little talk of a recession here ATM.

Bring on the 2% IRs mentioned in a recent D&G post :).
 
Call me an optimist but I think we can stand on our own feet now, without the US holding our hand.

The US is in depression, world economies are "adjusting" and soon enough people will realise that we are stronger than we thought.


Regards Jo
 
josko said:
Call me an optimist but I think we can stand on our own feet now, without the US holding our hand.

The US is in depression, world economies are "adjusting" and soon enough people will realise that we are stronger than we thought.


Regards Jo
Click to expand...


I thought it went along the lines of (very simplistically):

US - big consumers
China - manufacturers for big consumers
Australia - raw material for manufacturers

If the US doesn't consume any more, the manufacturers can't sell, they stop manufacturing and stop buying raw material....

Cheers,

The Y-man
 
The Y-man said:
I thought it went along the lines of (very simplistically):

US - big consumers
China - manufacturers for big consumers
Australia - raw material for manufacturers

If the US doesn't consume any more, the manufacturers can't sell, they stop manufacturing and stop buying raw material....

Cheers,

The Y-man
Click to expand...

What, 1 billion plus Chinese don't consume?:eek:
 
The Y-man said:
I thought it went along the lines of (very simplistically):

US - big consumers
China - manufacturers for big consumers
Australia - raw material for manufacturers

If the US doesn't consume any more, the manufacturers can't sell, they stop manufacturing and stop buying raw material....

Cheers,

The Y-man
Click to expand...

True but consider this. We cannot supply out of the ports fast enough at the moment. So a slow down may not translate to less sales in volume but less profit per tonne. As such existing workers are still needed. They may not get wage rises but still needed.

I would be more concerned for those south american countries like Brazil who complete with Aus and have to transport further by sea and who pick up the slack our ports cannot supply.

Also, my opinion only but, in relative terms, if you are a Chinese farmer use to living on little and you now have a lot working in a factory, then a global slowdown comes and you get told the lot is now halved to some, is some still better than little. I would think so?

Here we have welfare, in China they have hunger.

Peter 14.7
 
FYI I have just moved all my super to Cash rate arund 5%. Lost 4.5% last year in core and most in the Jan to July period.

Yes I am too late for this week but my logic is, better late than never.

I wanted to do in Jan, got busy, too late. Then April drop, oh no!! again, too late again lets wait. Then July. now Sept. As said, better late than never.

Remember September is traditionally the month of the market drops like 1987.

Peter 14.7
 
If the US doesn't consume any more
Click to expand...

I could never subscribe to that notion.


We cannot supply out of the ports fast enough at the moment.
Click to expand...

Agreed.


So a slow down may not translate to less sales in volume but less profit per tonne.
Click to expand...

Don't agree with that.

I was under the impression these 25 and 30 year supply contracts were fixed in both supply amounts and prices. I'm not privy to the exact details in the contracts. Just a lowly pleb working away.

However, the BHP's, Rio's and oil majors don't go spending money on train lines, ports, carriers and LNG facility trains, along with offshore platforms and pipelines without locking quite a bit down first. Banks won't fund them without guaranteeing volumes and revenues.

The revenue gained from the export of goods doesn't yo-yo up and down with the spot prices quoted. Most of prices for the volume shovelled out is agreed way in advance....for 30 years via mechanisms like market reviews every say 5 years.
 
The Y-man said:
I thought it went along the lines of (very simplistically):

US - big consumers
China - manufacturers for big consumers
Australia - raw material for manufacturers

If the US doesn't consume any more, the manufacturers can't sell, they stop manufacturing and stop buying raw material....

Cheers,

The Y-man
Click to expand...


Yes, I agree. We are much more linked together now globally than we ever have been. That's what globalisation has created.

Australia is good at producing food cheaply and efficiently, and we can dig stuff out of the ground cheaper and more efficiently than anyone, especially since a lot of the land with resources under it is almost worthless for any other purpose.

Japan had few natural resources, so they had to get good at something, and they did, electronics and manufacturing.

etc, etc. etc.

Everyone doing mainly what they are good at and then trading with each other for the things they aren't good at. So we trade food and coal, for electronics and cars with Japan.



I'm all for globalisation. It's increased the living standard of most of the worlds inhabitants, but it means we are linked closer than ever.

See ya's.
 
Average annual income of traditional Chinese farmer: 100 USD per annum

Average wage in Shanghai for an ayi (maid): 4 RMB / hour or about 80 Australian cents per hour.

Assuming a 50 hour work week that's an annual income of about 2k Australian (including red envelope tips) or 15 times what the farmer makes.

I don't know what factory workers make in comparison to ayis but I do know that companies are moving from the east coast of China to Vietnam because wages are getting too high in China.

So if you are an ayi and your income drops by 50 percent you are probaby still better of than on the farm.
 
Dazz said:
I could never subscribe to that notion.




Agreed.




Don't agree with that.

I was under the impression these 25 and 30 year supply contracts were fixed in both supply amounts and prices. I'm not privy to the exact details in the contracts. Just a lowly pleb working away.

However, the BHP's, Rio's and oil majors don't go spending money on train lines, ports, carriers and LNG facility trains, along with offshore platforms and pipelines without locking quite a bit down first. Banks won't fund them without guaranteeing volumes and revenues.

The revenue gained from the export of goods doesn't yo-yo up and down with the spot prices quoted. Most of prices for the volume shovelled out is agreed way in advance....for 30 years via mechanisms like market reviews every say 5 years.
Click to expand...

Hello Dazz

Good points. So on basis and assuming we are not in for a worldwide ten year recession I think the BHP et all will still invest as rail lines, ports, etc..Takes 5 years to come on line. Income is secure, demand is still historically strong.
Case in point: In your good state of WA , Uranium Miners has been reported as to spend $$$$$$ now they have a pro Uranium Lib Gov. Even so it is 5 years to any export.

http://news.theage.com.au/business/new-wa-government-triggers-uranium-plans-20080915-4gtp.html

My personal longstanding opinion is Australia is immune to almost all global factors because, let’s face it, we are a lucky country.

We have secure, representative government (no juntas here) We have cheap energy (250+ years coal, 30%? world uranium), cheap food (best farmers in the world), security (continent country) and not many mouths to feed. Not so cheap housing but that depends on where you want to live or how well (another debate all together).

If everyone stops buying our coal we will not suffer hyperinflation in food like say Japan. If the world forces the closure of coal, then we go nuclear power. Oil will become less relevant in 10 years plus when most cars go to plug in electric.

IMO we only need to fear two outcomes;

WAR: Military Attack (conventional or nuclear) from another country
FAMINE: Water shortages affecting primary production (global warming and/or chronic drought)

Only these two possibilities, can in the foreseeable future, seriously affect our quality of life.

Peter
 

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