25 Replies to “It’s Probably Nothing”

  1. There has been a very noticeable change in the tone of financial amoung my friends and associates – bankers, lawyers, corp execs, money managers and insurance guys – to the very pessimistic side in the short to mid-term.
    It’s hard to see the trajectory improving anytime soon – the markets and govts around the world have to hit bottom before there is a recovery and the establishments resistance to letting that happen is only making it worse. I suspect that much of the general public is more accepting of this fact than they are.
    And make no mistake there will be pain here in canada – two of the largest market bubbles in the world are Toronto and Vancouver. And quebec is just beginning to reap its own version of the Greek tragedy.

  2. I agree with Rush…..treasury Secretarys do not hold press conferences for nothing.
    Bernanke announced a recession and the market panic took over…….

  4. So, we spend a couple trillion dollars to put off what should have happened in 2008 off for a couple of years. Instead of being on the road to recovery, we are just digging deeper.
    I am just moving along as usual, but every year I learn a little more about producing and preserving my own food. Make my garden a little bigger. Add meat chickens to the small flock of hens.
    Outfitting the house with backup wood heat. I like all of these things, so it is no trouble.

  5. Gord, it took Canada about 10 years to turn its national finances around. Starting from about 1989, it took the country about a decade to achieve budget surpluses and restore the AAA credit rating. It will take at least a similar amount of time to purge all the bad debt out of the system and recover from the long term recession that results.
    Tim, there’s an old saying about good money after bad.

  7. How is this?
    I’m not an american and Obama and his admin are screwing my pension all the way to hell.

  9. Gord, you are right when you say there is going to be pain in Canada, largely as a result of the US economy, and the utter incompetence demonstrated by presidedent zero (gawwd…who knew that a community organizer would be unable to run the most powerful nation on earth?).
    A few years ago, anticipating a huge decline in the US dollar, I bought a bunch of gold and silver bullion, not as an investment, simply as a hedge. When the six 100 oz silver bars that I purchased for $675 each went up to $4500, I probably should have sold. Likewise the gold. At current prices, am still not interested in selling, because it is a hedge.
    I think that there are very bad economic events coming that are going to effect all of us.
    It is beginning to be close to the time for “hunkering down” to weather the storm…we’re not there yet, but may well be in another year.

  10. “There is a tremendous amount of money to be made shorting the market.”
    Kyla:
    I spent several hundred thousand dollars to learn the following lesson: By the time you and I realize that shorting is viable, and identifying which stocks to short, the “smart money” guys have been there, done that, and are gone.
    Playing the market can be fun, and sometimes profitable. But don’t ever think you’re going to outsmart the big players…it would be like getting into the ring with Ali at his prime…you wouldn’t last a round…

  11. Lev – does this mean that I won’t get my pension, or just that it won’t buy anything? I guess it was wise to take early pension at 60; or was it dum?

  12. “It is about whether a global financial crash will further destabilize the Middle East and, if so, what we and the Europeans are going to do about it.”
    Nothing, let them crash, they are unstable(the Arabs live to cause instability) and it’s time they crashed and they stopped using the only commodity they have to offer, oil, for political leverage instead of peaceful trade.
    (imagine what would happen if Food Super Powers like Canada acted like these MidEast Oil Tics)
    It’s time we stopped feeding rogue/terrorist regimes.
    I think the food riots we’ve seen this year prove that we have more power with our FOOD than the MidEast Oil Tics have with their oil, we are just to principled and humane to act in such a skeezy way as these A-holes.
    Since the Saudi/Iranian backed Islamists have just finished taking it all over, Let Them Crash and Burn!
    “It is about whether sovereign governments can still underwrite economic performance and financial stability in the leading economies of the world.”
    This is what caused the trouble we’re in.
    Sovereign governments underwriting investments and mucking about in the market place.
    This must end.
    This: governments backing corporations/banks investments, is the source of corruption.
    Corruption such as the AGW scam, and corruption such as corporate backed candidates becoming the government, undermining democracy, and being deleterious to society and the entire concept of democracy as a whole.
    (AGW, H1N1 Inoculation scam, etc.)

  13. For years every government in the western world has been spending money well in excess of their tax revenues. I expect that interest on debt is the major expenditure of every government. Governments stay in power in democratic countried by bribing voters with there own money. We are about to have an election in Ontario which looks like it will be more of the same. Governments always count on economic growth to make their debt to gdp ratio stay at a level that they can deal with. In Ontario we spend half of all provincial revenue on health care and something like 25 % on eduction. Everyone wants the government to cut spending – on everything except health care and education. The government could cut all spending except those two items and still run e deficit. I have seen studies that say that due to an aging population we will need to spend 100 percent of provincial revenue on health care just to maintain the status quo within twenty years. We are screwed and there is really nothing any government can do to make it right. The best case scenario is hyper inflation wiping out the governments debt, but it will also wipe out everyone elses savings. At least it won’t mean taxing our great grand children to pay for our current excesses. I see many parallels to now with the 1930’s, and tht didn’t end smoothly.

  14. It’s high time people realized that government is the problem and not the solution.
    We are boxed in with no way out. Governments are only prolonging the agony by playing games. All savings, pensions, and insurance values will evaporate, leaving most people penniless. Only the rulers and their crony capitalists will survive.
    When everything crashes and burns, an honest monetary system will be instituted. Then and only then will wealth generation and prosperity return.
    Until then, we are in for some really hard times much worse than the great depression because we are no longer an agrarian society which can at least feed itself.

  15. Larben,
    obviously the Canada pension, if pensions go, will be the last to go, though don’t think that will happen.
    It’s the company pension. People in general think that if they have a company pension they got it safe.
    No such thing, if you look at the fine print, a company can terminate a pension plan. If you put your own money in the company plan, you will get it or what’s left of it.
    It’s the RRSP, if you put it in GIC, accounting for inflation, you probably loose. If you put it in the stock market you have a better chance, though right now there are few stocks that make money and they are expansive.
    Speaking from recent and present experience things are way, way down.
    What needs to happen is to unleash free enterprise, that is where wealth comes from. The socialists/fascists can demagogue all they want, socialism did not produce a bloody penny for anybody.
    The socialists take from producers and make themselves look good giving it away as though it is theirs, of course along the way they skim off the top, like good mobsters would.
    Sorry to take a detour in the comments, something got into me, haven’t had a drink of anything but tap water.

  16. Hate to break the bad news but two sets of words are ever closer today
    soylent green and blade runner

  18. I went 80% cash in May. The reasons are unfolding as you read this. There is much more to come. BTW – the other 20% is in bonds.

  19. Really no surprise, as gold has bubbled in the last quarter, its price graph looking much like the real estate bubble graph from the aughts. Sooner or later something hits the market, and the money comes pouring out. Hedge funds in trouble? Suckers bets no doubt, buy high sell low.
    Kind of ironic, as while all that panic selling is going on, the US dollar spikes, and telecom stocks prove to be a winner on a VERY bad day.
    Buy utilities for stability.
    China is overdue for a correction, but, its market is skewed thanks to virtual government control, they will just print money, and never tell the whole truth, as they are so much smarter than us.
    Thank you PIIGS, and you too, ZERO

  20. If and when we ever recover, we should change the basis of our democracy.
    We need to restore balance and prevent the politicians from scamming us once more into a similar disaster. We need a structure that saves the fruits of finite productive people-years from short term political gain. Today the flawed incentive for politicians is to master the divide and conquer exactly opposite.
    It must include a recognition that the scam, uh, i mean system is based on confiscating and dividing resources.
    Here is a modest proposal.
    Beyond our basic vote(=1), it is additional equal votes according to the amount of contribution you (involuntarily) contributed to the state. Individuals contributing double the average should get to double their votes, = 2 votes, etc.
    Or another perhaps easier to sell variant:
    Basic vote = 1 vote
    Basic vote plus property tax payer bonus vote = 2 votes
    Basic vote plus property tax payer bonus vote plus income tax payer vote = 3 votes
    This should restore some balance between the forces for consumption, and the interest of preserving productive capacity.
    Let’s refer to it as Proportional Representation….

  21. trappedintrudeaupia – like your “proportional representation” idea; I’ve floated similar ideas on SDA a number of times. Your label might make it the most palatable.
    What I’ve decided to do is to cash in all of my RRSP’s, take the tax hit, and use the money to pay off my mortgage as well as buy canned food, even more ammo, and stuff that I can easily trade in a barter economy. Right now my investments are slowly declining in value and, under the assumption that massive inflation is going to be the way of the future, the best thing is to have stuff to trade.
    I’ve got probably 30-40 lb of silver coins – carefully collected by my late mother who probably never knew how much her “coin collection” would be worth now. I won’t sell it as silver is a useful metal. I wouldn’t mind having gold, but not as an investment as what that implies is that at some future time someone would be willing to trade something of large value for it. The primary function of gold is to produce non-oxidizable circuit board contacts and I wonder how much the heavy gold plating on all of the circuit boards my wife made me get rid of is worth now. Admittedly they were taking up space and were actual transistor circuits from long dead IBM mainframes.
    Aside from the obligatory large number of guns (enough that one can bury a significant number in various places in case statists decide they don’t like peasants owning guns), and lots of ammo to feed same, a good supply of canned food is crucial. Didn’t realize that this was a higher priority than I thought as I’ve been finding more and more paper packaging instead of metal – presumably so that a lazy person can stick the whole thing in a microwave. A generator and good stock of gasoline are also essentials as well as lots of spare parts for things.
    I don’t worry about finding work as I assume people will still be getting sick in the midst of a recession. I’ve started to hoard expired sample drugs as I suspect that one of the first things to go if we have a major crash is a lot of the pharmaceutical industry. Probably should stock up on some of the most stable antibiotics in industrial quantities. The other very useful drug to have around is morphine; a number of times when I’ve been in a situation with a number of doctors discussing the situation of if you only had one drug available for your use what would it be? And, the unanimous answer every time was morphine. If the situation is medically hopeless, at least it can be made more comfortable. Should first check and see what the college of physicians thinks about doctors hoarding large supplies of morphine in anticipation of an economic collapse.
    Fortunately where I live there are ample supplies of pine-beetle killed wood and will have to head into the bush with my chainsaw to cut down a winters supply of fuel. Time to start planning before it’s too late to do so. I’d never get around to retiring anyway and probably die of boredom if I did so.

  22. @trappedintrudeaupia
    1. income taxes should be abolished in any case, so no votes for income taxes
    2. people who cannot contribute to society should be taken care of by society; however, they must not have any say in how the freebies will be handed out lest they start voting for politicians who promise them the most; so no votes for such persons
    3. people who pay rent are paying the property taxes of the landlords; so how do they get a vote for their contribution?

  23. 3. people who pay rent are paying the property taxes of the landlords; so how do they get a vote for their contribution?
    ~Rizwan
    They don’t get a vote if they are renters, paying the property tax is just part of the rent, they aren’t stakeholders in the property or neighbourhood, they’re just customers who rent accomodations.
    There will be plenty of cheap housing in the future when the housing bubble really collapses and Baby Boomers start dieing off.
    They can buy a stake in a property then.

  24. I too am 100 percent in cash in most investments.I will reconsider my strategies when the Dow Jones is at 6000 points or the November 2012 U.S. election is at hand.I have some oil stocks that I wish I had sold in 2007..but what you gonna do..will not sell them now.I personally hope to search for the bottom and then take my chances in Asian markets.The powers that be are sitting on an ocean of capital waiting for the bottom(ie.panic selling)and will then swoop in and buy up the world…cheap…bank on it.

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