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Tag Archives: bubble

Memo to China: Your Market Moves Are Doomed to Fail

When an economy is built upon dishonesty, and dishonest prices most importantly, an economy’s reckoning is only a matter of time. The further the charade goes on, the worse the reckoning. China’s been going on for a long time.

Now the Chinese government is trying to save its market with more central planning and knob turning. And don’t forget about the guns it has too.

But ultimately the system will erode. It isn’t built on real prices.

Many people in China don’t even really know what honest pricing is. Including in high level policy circles.

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Billionaire investor Icahn, We are in a bubble, could be “very very destructive.” (Video)

Yeah, the reckoning has been coming for a very long while. The Fed is out of control and lost. The stock market as it is is not sustainable. Many other markets are in the same boat.

Any market which reflects the wants and desires of the rich (aka those closest to newly “printed” money) is pretty much in a bubble. Art, wine, etc. Even residential real estate in places like London and New York are bubblicious.

It isn’t going to keep going. When this bubble bursts there will be serious dislocation economically and politically.

Below Marc Faber opines on Carl Icahn’s comments.

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A Tale Of Two Bubbles: China vs Nasdaq

Sometimes 2 trends will look eerily similar for a good long while and then the 2 trends will diverge. We’ll see in this case.

However there is a very good case to be made for a Chinese stock bubble, hell, a Chinese country bubble in many respects.  China is the ultimate crony capitalist state.

That China is rattling its saber with such vigor lately may be a symptom of a Communist Party which is seeking to focus attention away from domestic economic issues.

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MARK CUBAN: This is just the start of the college implosion

My wife and I were just talking about how we hoped the student debt bubble would hurry up and deflate. We have kids to put through school in the not too distant future and the sooner things settle out the better. The current situation cannot continue. Tuitions are unsustainable. Student debt has fueled a bubble in the University system and it is going to end. Perhaps badly.

This week we may have gotten a glimpse of things to come. Just down the road from me, Sweet Briar College has decided to close up shop. Mark Cuban thinks it’s the first of many.

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The world is headed for another debt ‘heart attack’

Debt is addictive. Once one gets on the stuff it is nearly impossible to get off of. And like all hard drugs, sooner or later debt will extract its toll. It certainly did in 2008. But instead of getting sober and real after that fateful year the world went on a binge instead. Not a very healthy thing to do. There will be pain, likely quite a lot of pain when the debt stops “working.”

When will reality come calling? It already has in many parts of the globe. But even the instability we see now is likely only a precursor of what is on the way.

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Life in the “Income Depression”

Newsflash! Things are not good economically.

Most people make significantly less in inflation adjusted terms than they did prior to the 2008 Crash. And it should be noted that the economy prior to the Crash felt pretty hollow too. People forget this now. But nearly everyone was living off of the housing bubble in the Bush years. That’s why it hurt so bad when housing ate it.

Remember the sea of realtors? At one point – around 2006 – it was basically impossible to go to a barbecue without meeting a realtor or a mortgage person. Idiot sons across the country were making money hand over fist, buying Suburbans, and getting in on rental properties. Where did all those people go? Actually don’t tell me. That the depression has wiped out this crowd is one the few positive outcomes of the last few years in my estimation.

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Dow down almost 300 points at this moment, Fear of a Fed created bubble chills markets

In the attached article from CNBC the point is made that the real bubble is likely an inflated confidence in the Federal Reserve.That come what may, the Fed will intervene in markets and buoy them. So what if stocks are over extended, Yellen and the FOMC will save the banker’s posteriors. As we’ve said before this sounds very much like “housing prices always go up” to us. If sentiment regarding the Fed were to change, if traders were to fear that things were bigger than the Fed, a downdraft could be wicked.

We’ll see. There’ve been many blips over the past 5 years and for the most part the pro-Fed folks have been right as far as equity prices are concerned. (Little else.) Maybe this is just another blip on the way to Dow 20,000 and beyond.

But maybe not.

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