Impending Economic Collapse of 2012-2022
Impending Economic Collapse of 2012-2022 by John F. Carlucci DEC 8, 2011
The series of charts provided by Doug Short at advisorperspectives.com point to various long and short term scenarios for the market, several of which have a very high probability of coming to pass. Statistically, it is extremely unlikely that the mathematical patterns discussed here are simply due to random chance. Taken as a group it would seem to be virtually impossible.
Although the patterns are mathematically driven and not dependent upon world events it is fascinating how current events seem to be aligning with the near term pattern. In particular, the S&P decline indicated for 2012 - 2013 coinciding with the very likely disintegration of the Eurozone and euro. Is there a silver lining for investors somewhere within this dark cloud?
Full text and charts of Part II (Dec 9/11) and Part I (Nov 28/11)
Harry Dent Explains the Demographic Forces
January 2012 - What happens when Boomers turn into Doomers? Harry Dent provides a road map here or in the embedded Youtube file below.
Charlie Rose Interviews Ray Dalio the Global View
October 2011 Charlie Rose interview Ray Dalio, head of the world's biggest (macro) hedge fund, Bridgewater Associates.
Full text of the interview online at Zero Hedge or via PDF here.
Danish Foreclosure Rates vs U.S.
The Danish Mortgage Finance Model (from Absolute Return Partners a London based private partnership www.arpllp.com September 2011).
The story begins with the great fire of 1795 which destroyed nearly one quarter of Copenhagen. Funding was required to rebuild the city and some egghead came up with the idea of issuing bonds to fund the massive capital requirement. As a result, the first mortgage association was established in 1797. The adoption of the Constitution of the Kingdom of Denmark Act in 1849 provided the first regulatory framework and Danish mortgage financing has ever since been tightly regulated, ensuring an entirely unblemished track record with not a single default to report in over 210 years. Even in 1813, when the Kingdom of Denmark defaulted, the mortgage bond system survived intact. Even more impressively, the combined loss ratio for all Danish mortgage credit institutions (MCIs) has never exceeded 1% in any one year – a number most other countries can only dream of.
Denmark has the best mortgage system in the world. It is transparent and inexpensive. The interest rate of a mortgage loan and the prepayment price are directly reflected in the price of the mortgage bonds funding the loan. And everybody can monitor bond prices daily – for instance in newspaper price lists. Interest rates mirror the prices investors pay for the bonds. And Danish mortgage bonds are attractive due to their high security level, leading to low mortgage rates. Read the Whole Report.
Absalon Project (Absalon) will market the Danish Mortgage Solution on a worldwide basis. Absalon is an extension of a partnership between affiliates of VP SECURITIES A/S and Soros Fund Management that was established back in 2005 with the purpose to implement the Danish Mortgage Model in Mexico. This project was successfully carried through with the creation of a mortgage servicing company in Mexico named HiTo that issued the first loans based on the Danish Mortgage Model just before Christmas 2007. Since then HiTo has introduced more loan types to the Mexican market and is issuing loans on a weekly basis, using the solution provided by Absalon.
There are many more studies at the Absalon Project download page: http://absalonproject.com/downloads
Canadian House Prices vs Debt
What's really driving house prices in Canada?
Chart from The Economic Analyst June 23, 2011
3 Ingredients of Market Bubbles
"Innovation, speculation, and delusion have come together in bubble after bubble", says Financial Analysts Journal editor Rodney Sullivan. March 7, 2011 Text Version or Morningstar Video (7:19min):
My note: with respect to Canadian real estate we have a long history of central government risk suppression policies (via CMHC and the BoC) as prime manufacturer's of "innovation", and we have the resulting unbridled "speculation" via leverage (debt) as prices rise, and we have mass delusion in the form of the greater fool who will come along and pay an even higher price. BR
30 Year Buy or Rent
30-YEAR Buy vs Rent Chart (theeconomicanalyst.com & housingbubble.jparsons.net)
There is a time to own and a time to rent.
In Canada, it's Time to Rent through the inevitable mean reversion.
Keep building up cash, it will one day have value again.
Gold is actually outperforming real estate and all other commodities by a wide margin.
U.S. Residential Housing Bust.
This chart of U.S. Housing since WWII is the same old CyclePro forecast for the US residential housing bust.
We are still on target for a rubber band snap down from the 2006 peak that should take the Case-Shiller index well below the historical low price channel trend line. Despite the Fed's multiple interventions to prop up housing prices, my forecast really does not need much adjustment. Steven J. Williams January 2, 2011
Change in CPI of Japan vs U.S.
Following the Path of Japan and the Madness of Bernanke Fighting Just That
"I have been saying for 5 years the US would follow the path of Japan. An interesting chart in the New York Times shows this is indeed what has happened." by Mike 'Mish' Shedlock November 21, 2010
Prices plunged 60% in 6 years
1997 Hong Kong Housing Blowout
Prices plunged 60% in 6 years. Chart by Gus Lubin October 29, 2010
The current Hong Kong housing bubble worries were renewed this week when prices passed the 1997 peak, and you can see what happened after the 1997 peak.
Hyperinflation is very poorly understood by modern economists.
Cullen Roche's research has shown that this is likely due to the lack of evidence showing direct connections between economic environments and consistency in prior cases of hyperinflation.
The widely held belief is that government debt and deficits (aka, “money printing”) lead to hyperinflation. But Cullen's research shows that hyperinflation is not merely the result of “money printing” or an expansion of the money supply and in fact tends to occur around very specific and severe exogenous economic circumstances which lead to an increase in the money supply ultimately leading to hyperinflation.
Hyperinflation is not merely high inflation or a collapse in confidence, but is actually due to severe exogenous shocks with very real and provable transmission mechanisms. Historically, these events tend to be:
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'