Debt Rattle May 13 2014: The True Parasites Of Finance


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    Jack Delano Information desk, Union Station, Chicago January 1943 This morning I saw an article by Barry Ritholtz on Bloomberg that got my few remaini
    [See the full post at: Debt Rattle May 13 2014: The True Parasites Of Finance]


    @Ilargi (or anyone else who wants to take a crack at it),

    Always trying to decipher what Martin Armstrong is actually try to get at (and whether or not he really knows what he’s talking about), and his post today was particularly confusing:

    Understanding the New Era we Face – No More General Terms Apply

    If anyone would like to chime in and perhaps lay it out for me how what he is suggesting (i.e. flight to private assets, not a crash where bonds will rise and assets will turn to dust) aligns / conflicts with what is generally proposed here at TAE, it would be oh-so-much appreciated.

    Thank you!


    Variable – the rich are chasing yield. They’re not buying collectibles for safety; it’s for price appreciation. They’re hoping another rich fellow with more money than brains will buy whatever they’re selling. It’s just another bubble that will crash like the rest of them.

    “Modern art is valued in terms of modern money,” he wrote. The Fed’s low-interest-rate policies have driven the wealthy increasingly to collectibles of all kinds, including art, cars and jewels. “Miniature interest rates have reduced the opportunity cost of investing in any kind of nonyielding asset.”

    And while Koons and Basquiat are hot now, they might end up like the English portraits of the early 19th century, whose frenzied boom was followed by a spectacular bust. Prices never recovered.”

    “After 2008’s worldwide crisis, investors flocked to alternative investments. Fine art, gold, and fine wine collections were targeted for their growth potential. But, for varying reasons, those markets have corrected and can no longer be relied on to provide triple digit returns.

    While other assets have peaked then declined, collectible classic cars have outperformed. A bubble occurs primarily when people are speculating. And that speculation often involves overextended credit. Add to that, many investors fall victim to hype, euphoria and “irrational exuberance” as it was once called.”

    One author said that “art is the next gold”, another bubble with upside appreciation at the present time. They just keep moving from one bubble to the next. Real estate at the high end is only rising in pockets (the east coast with the bonuses, wage hikes and dividends), especially around Washington, D.C.

    If this all collapses, whose going to hold the asset prices up? This is nothing but cheap money, easy credit and leverage supplied and encouraged by the Fed and the government.

    That’s what my common sense tells me is happening, but who’s to know?


    Just watched the first episode of The United States of Secrets, a two-part documentary about the NSA revelations done by Frontline (2 hours). Very well done! Watch it if you can. Here’s just the first eight minutes. It starts out with Snowden, but then goes back to when they first started “The Program” of recording phone calls, emails, etc., and all of the people who objected (and there were quite a few).


    “As NSA General Counsel Stewart Baker has said, ‘metadata absolutely tells you everything about somebody’s life. If you have enough metadata, you don’t really need content.’ […] General Michael Hayden, former director of the NSA and the CIA, called Baker’s comment ‘absolutely correct,’ and raised him one, asserting, ‘We kill people based on metadata.’”

    I hope people wake up soon. This is scary stuff, truly 1984-ish.


    Thanks Raleigh.

    Though what I was focusing on was that Armstrong seemed to be talking similar language as we do here at the Automatic Earth while at the same time sounding like he was saying “this time will be different”, a statement I tend to avoid.

    But if there is any truth to his Economic Confidence Model, it would suggest a Great Depression style collapse around 2032… which would mean his next turning point (2015.75) is maybe something closer to crashes that occurred prior to WWI? Or as he says, something we haven’t seen in the past 200 years (any history buffs want to speak up about crashes in the 1700’s / early 1800’s? Its a bit out of my wheelhouse as I tend to focus more on the 1900’s up to now…)


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