Author Topic: Lack of credibility and collapse  (Read 2010 times)

pka222

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Lack of credibility and collapse
« on: August 14, 2012, 04:45:26 PM »
I'm interested in Charles's thesis here that the lack of credibility or the erosion of faith that homes are a path to middle class prosperity, that the EU is solvent and that generally high expectations can be meet will lead to a collapse in  the near term (several years).  The way I read "collapse" in this sense is a collapse in the stock market price supports but I may be mis-reading what he intends to mean collapse in the overall system.  The arguments are logical but the conclusion seems very pessimistic to me. 
Keen to hear what other readers think.

http://www.oftwominds.com/blogaug12/expectations8-12.html
http://www.oftwominds.com/blogaug12/credibility-expectations8-12.html

smedleyb

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Re: Lack of credibility and collapse
« Reply #1 on: August 14, 2012, 10:25:59 PM »
I'm interested in Charles's thesis here that the lack of credibility or the erosion of faith that homes are a path to middle class prosperity, that the EU is solvent and that generally high expectations can be meet will lead to a collapse in  the near term (several years).  The way I read "collapse" in this sense is a collapse in the stock market price supports but I may be mis-reading what he intends to mean collapse in the overall system.  The arguments are logical but the conclusion seems very pessimistic to me. 
Keen to hear what other readers think.

http://www.oftwominds.com/blogaug12/expectations8-12.html
http://www.oftwominds.com/blogaug12/credibility-expectations8-12.html

He also means "collapse" in the sense of "crash."  A market crash produced through too much government meddling, lack of order flow transparency, and HFT programs:

If you wanted to design a system that was eventually guaranteed to crash, then you'd design a system that is dependent on opaque official intervention and HFT/quant computer trading for 80% of its volume. That's the system the Central State, the Fed and the financial Elites are supporting and enforcing because it's an enormously profitable skimming operation that is also a supremely useful tool for managing perceptions: if the market trend is always rising, then the economy must be improving.

http://www.businessinsider.com/a-common-sense-view-of-the-stock-market-2012-8

Generally good stuff.  The "credibility" issue is huge, IMO, and will erupt like a volcano over the financial landscape very soon.  Nobody is bigger than the markets, not even our buddy Ben Bernanke at the Federal Reserve.