Tag Archives: stock bubbles

Stock Bubbles And Dutch Tulip Bulbs

“People were purchasing bulbs at higher and higher prices, intending to re-sell them for a profit. Such a scheme could not last unless someone was ultimately willing to pay such high prices and take possession of the bulbs. In February 1637, tulip traders could no longer find new buyers willing to pay increasingly inflated prices for their bulbs. As this realization set in, the demand for tulips collapsed” – “Extraordinary Popular Delusions and the Madness of Crowds,” Charles Mackay

“So yes, in a way I’m saying we can keep going up while at risk of reverting at any moment”NorthmanTrader.com

The market is melting up and indicators that a top is approaching are proliferating. This is one of the typical anecdotes that accompany markets nearing a top:   On CNBC last Wednesday morning the hosts plus a couple guests were discussing the market and one of the guests said that value doesn’t matter anymore “it’s all about momentum.” I almost fell off my chair when I heard that because the “fundamentals don’t matter it’s all about momentum” was one of the mantras in late 1999.

Chris Marcus (Arcadia Economics) and I discuss the current stock market melt-up and whether or not it can be shorted with success and how to manage the risks of being short:

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Some of the commentary above is  excerpted from the Short Seller’s Journal. Each weekly issue contains macro economic analysis, market analysis, and short ideas.  I  To learn more about this short-sell focused newsletter, click here:  Short Seller’s Journal info

China Is Headed For The Exits

A few years ago, we opined that Bernanke and his ilk created a stock market Frankenstein with their desire to generate ‘the wealth effect.’ We also regularly stated that eventually, markets stage violent revolts against central planning and command control. The revolt has only just begun.  – The King Report, Thursday, August 27

I have maintained that part of China’s “hidden” agenda in devaluing its currency is to let the air out of its bubbles ahead of every other asset bubble-infested system – the U.S. assets bubbles being the biggest (ignore the western propaganda slamming China).

It was revealed yesterday that China is now unloading its massive U.S. Treasury bond holdings.  The entire astute segment of the financial has been wondering for years when and how this would occur.  China has even given the U.S. Government a “courtesy call:”  China Selling Treasuries.

Rather than re-invent the wheel on my analysis, here’s some comments I made in an email exchange with Jay Taylor, who asked me if yesterday’s and today’s stock market action was a sign that the criminals running our system had “won:”

I’m trying to figure out why everyone is pegging Sept 23 as a key date.  If you go to Google maps and type in 09/23/2015, the map zeroes in on CERN – the European nuclear research facility.  I didn’t even know you could type dates in to Google maps. I’m wondering if that’s Google screwing around with the conspiracy crowd.

No, history tells us that the bad guys eventually always lose.  It’s just that they keep reappearing over time – it’s the human condition.  I personally think that China is letting the air out of its bubbles ahead of the crowd.  Now we see they are starting to really unload their Treasuries. I believe part of the reason that China is devaluing is to use this as “cover” for its desire to unload as much of their massive Treasury holdings as possible without trashing the market or losing the Fed’s “bid” for Treasury paper.

You won’t see this analysis in any of the mainstream media, or even a lot of the alternative media, because most of these “information purveyors” just regurgitate the script Wall Street puts in front of them or drool out the obvious explanations.  But we know that China never puts a plan into motion without a lot of planning and forethought.  There’s a lot more going on than the obvious.  Most “analysts” and commentators either have a very rudimentary understanding of economics and how markets really operate or they knowingly prefer to spoon-feed the public their snake-oil propaganda.

China was the first to “jump out of its seat in the crowded theatre” and head for exits, before the crowd see the inferno that’s been ignited.  It’s classic “prisoner’s dilemma” behavior.  Their doing this will likely mean that they suffer the least when the real brown stuff hits the fan blades.  The U.S. keeps trying to inflate its bubbles.  Look at yesterday/today.  Look at that absurd GDP “revision.”  The U.S. is interminably pumping money into the asset bubbles and churning out Orwellian propaganda.  It will end a lot worse for the United States than for China.

I think the market action starting last Friday is the beginning of the end for this era.  Just a question of how long the U.S. criminals can keep kicking that can.