Loading ...ZH on Pozsar and coming marketwide debacle
My charts for equities, bonds, PMs etc are lining up with the content and implications in this ZH post covering Pozsar’s views on repo …
I’ve expressed my views here going back 2-3 months that the PMs would sell off into late Dec (Fully can confirm) before the turn.
I didn’t know why. Now I know the why.
“It’s About To Get Very Bad” – Repo Market Legend Predicts Market Crash In Days”
ZH: In conclusion all we can say here is that 11 years ago, on September 5, 2008, ten days before Lehman filed, there were massive marketwide repo problems (recall the repo market froze in Sept 2008 and only a multi-trillion bailout by the world’s central banks prevented civilization collapse) and almost nobody understood them… with one exception: Citi’s Matt King did and he laid out all the problems in his iconic Sept 5, 2008, piece “Are the Brokers Broken” in which he predicted the collapse of Lehman. Ten days later he was right. Will Zoltan Pozsar be this generation’s Matt King?
pdl: And yeah, this is above most everyone’s pay grade. It is what it is.
QE4 soon:
https://t.co/sG8HZm1P9C?amp=1
Alex, very interesting piece. The charts do show this is true : “… Neither does anyone think that the Fed will cut one more time in December … or that the Fed will start buying coupons from dealers …”. They also mention the FED will do nothing until their hands are forced… I’m thinking FED will be too hawkish this week, and markets will not react well. Slump down.. then rate cut probabilities sky rocket for next FOMC meetings.
Things are gojng to get interesting – 🙂
I am rather inclined to think that gold will tend to do rather well in interesting (trying) times, although perhaps not at the very beginning. If gold does well at the very beginning, gold stocks may or may not also do well at the very beginning.
I wish I had a reliable crystal ball. I am confident that I do not. I am somewhat disinclined to believe that anyone has one.
Among what I see as uncertainties are which direction quoted gold prices react in a given acute crisis–though I think gold prices (at least unofficial ones) are likely to go extremely high after a while if not at a start. I do not think it’s clear whether gold stock prices follow or precede moves. The question of individuals’ access to any windfalls they feel they might deserve is a big one in my mind. For example, will there be de facto confiscation or delays in access via windfall taxes, rations on how much one may take from beleaguered financial institutions holding stocks, convoluted regulations on sales of stocks or bullion, and so forth?
There was a time when I tended to look forward with interest to interesting times. Not now, not very much. Now I wish I could count on things working in predictable fashion. Maybe they will. I suppose there’s a good chance.
From my friend Carl who I copy here periodically….
The total national debt is $23 trillion. The big talk among two Democratic candidates, Sanders and Warren, is how to tax billionaires. But they don’t want to tax them to pay off what the U.S. has already spent, they want more money to spend on their programs. There are 607 billionaires. The top 15 billionaires net worth is estimated to be $882 billion. Another 34 billionaires have what maybe an average of $30 billion each, or another $950 billion in net worth. Another 351 billionaires have assets valued at an average $7 billion each or about $2.4 trillion. Plus another 207 with an average of $2 billion each, about $414 billion. Those are huge numbers, but they are small numbers when stacked up against the national debt and how much it is increasing every minute of the day.
Here is another way of looking at the national debt problem. The average family has saved about $15,000 that is in a bank. This story is beginning to remind me of why there was a French revolution in the early 1800’s.
Of course everyone’s money in a bank came close to disappearing in 2008—just a minor issue. It did not matter if you had a little of money or lots of money, it almost vanished. A big bullet was dodged due to Hank Paulson and Ben Bernanke. But the average amount of government debt per citizen is now almost $70,000. The average debt per tax payer is $187,000. Yep, it’s a good thing the government can print money—-or is it?
And don’t forget the country has another $128 billion in unfunded liabilities in Social Security and Medicare programs. But compared to our national debt that is a minor problem.
I have argued that what determines net worth is debatable because wealth that is based on a stock price can be very misleading. Wealth based on an art collection or wealth created by a business or real estate properties can be here one year and gone the next or most likely in lifetime. But let’s assume that all of the billionaires money can be confiscated and used to pay down the national debt. How much would the national debt be following that event? With the liquidation of all the wealth of billionaires the national debt would still be $19 trillion, and there would be nothing left to tax from billionaires. What did we spend that money on? The military, wars in Iraq and Afghanistan and Medicare. Very little was spent on anything else. And we wonder why the educational system in the U.S. is in a financial mess and we are continuing to destroy our environment in the name of profit.
So if liquidating all of the assets of billionaires is not enough to return money to those who may want it in the future, who is asked next to pay up?
My numbers that I use as averages are guesstimates, but in trying to come up with a final example, what does a billion here or there count for? How does one define hopeless and bankruptcy when it comes to the national debt? The only advantage the U.S. government has is it prints its currency. But what happens if people decide they prefer something else to exchange goods with? The dollar will lose value. The losses will be slow and more like a drip, drip of loss, not a waterfall effect. Take a look at what has happened to the British pound since 1900 to understand the impact of dripping vs. diving.
May as well be written in Slobovian
Slobovian characteristics and attributes include but are not limited to:
Driving Slow in passing Lane,
Slobovian
Double Parking in front of open parking spots,
Stopping at green lights,
Excessive Smoking,
Going to busy convenient store and trying out all of the cigarette lighters while a line forms behind them,
Making Right hand turn from far left lane to go to convenient store for pack of smokes and to try out lighters,
Falling off balconies while engaging in spitting contests while out having smoke,
not using English Words, the , a , an, etc For example:
“Going to store to have smoke and try out lighter…”,
Drive around in modified Dodge Omni with fin on the back and big “Boompa” Stereo listing to Polish Rap music,
LOLOLOL
and did you know
Lower Slobbovia (also sometimes called Outer, Inner, Central, Upper or Lowest Slobbovia) is a term used in conversation to denote a place which is underdeveloped, socially backward, remote, impoverished or unenlightened. First coined by Al Capp in 1946, the term has also been used by Americans to refer in an informal way to any foreign country of no particular distinction.
and
Capp’s icy hellhole was ruled by King Stubbornovsky the Last (a.k.a. Good King Nogoodnik). The Slobbovian politicians were even more corrupt than their Dogpatch counterparts. Their monetary unit was the “Rasbucknik”, of which one was worth nothing, and a large quantity was worth even less, due to the trouble of lugging them around