. âBrazil trader shoots self on stock trading floorâ Brazil trader shoots himself on stock exchange trading floor Monday November 17, 2008, 4:02 pm EST SAO PAULO, Brazil (AP) -- A stock exchange trader has shot himself on the trading floor in Brazil. Sao Paulo's Bovespa stock exchange says the 36-year-old man shot himself in the chest a couple of hours before markets closed in South America's biggest city. The Bovespa statement says Paulo Sergio Silva was taken to a hospital, but his condition was not immediately available. It was not clear if he shot himself due to the recent sharp losses in Brazilian stocks or for other reasons. Trading was halted for a few minutes after the shot was fired on Monday. Source: http://finance.yahoo.com/news/Brazil-trader-shoots-self-on-apf-13597937.html .
. February 20, 2009 SouthAmerica: On Wednesday evening I was watching The Charlie Rose Show and he had some interesting guests such as Nouriel Roubini and Larry Summers among others. You can see the comments about that show at: http://www.charlierose.com/view/interview/10090#frame_top Nouriel Roubini, it seems to me is one of the few economists who have grasped that we are in the beginning of a new Great Depression. We are descending into a new Great Depression day-by-day, month-by-month, and most economists still are in denial or they donât understand what is underway. ***** Today I posted the following on the CRS: In January of 2003 I already had started writing on my articles about the coming new Great Depression. It has been very clear to me for many years that the new great depression was on its way and the Perfect Storm was about to hit the United States and the global economy. Four years ago I wrote an article describing the financial meltdown that was going to happen before the presidential election of 2008, and how the U.S. dragged the world into a new great depression. Today one of the few economists who have grasped the severity of what is going on is Mr. Nouriel Roubini. Larry Summers mentioned on your show that he is aware of the business cycle. I hope he is also aware of the Nikolai Kondratieff long-term economic cycle. Larry Summers also mentioned the influence that John Maynard Keynes had on his way of thinking right now â but I wonder what happens when we have a cocktail mixture of John Maynard Keynes with Joseph A. Schumpeter. I wrote an article about John Maynard Keynes and Joseph A. Schumpeter which was published on Brazzil Magazine - September 06, 2006 âWhile the American Dream Is Outsourced Brazil Drives the World into the Futureâ - Written by Ricardo C. Amaral http://www.brazzil.com/component/content/article/171-september-2006/9684.html ...Technology Changed Everything - Right now, we are in the middle of a historical turning point. In the last few years we had a revolution in technology, and today we can do things that were not viable only two years ago. *** Itâs 2008. The U.S. Has Dragged the World into a Depression. http://www.elitetrader.com/vb/showthread.php?s=&threadid=124509 Over 75 years ago Wall Street Crashed; but today the New Crash is already underway... http://www.elitetrader.com/vb/showthread.php?s=&threadid=117003 â¦The truth is the world is overdue for a new economic depression. Historically we had a depression in the world once every 55 to 60 years. The last world depression was over 60 years ago. A Russian economist, Nikolai Kondratieff, published a study in 1926 showing that a very long-term economic cycle existed. His major premise was that capitalist economies had a pattern of long wave cycles of boom and bust. The bust cycle repeated itself approximately every 60 years. If you had read Kondratieff's paper in 1926, you would have known that an economic depression was around the corner. Kondratieff identified four distinct phases the economy goes through during each cycle: 1) Inflationary growth, 2) Stagflation, 3) Deflationary growth, and finally 4) Depression-falling prices, falling stock prices, falling profits, debt collapse. *** I wrote the following on October 29, 2004: â¦This time around, "Derivatives" will be the trigger to a massive stock market collapse. Any way, today we are away overdue for a new stock market crash, and worldwide depression. .
And I think it could be worse than the 1929 depression http://www.elitetrader.com/vb/showthread.php?threadid=154399
. November 9, 2009 SouthAmerica: Nikolai Kondratieffâs 1926 analysis also still valid today. ***** âThe Man Who Predicted the Depressionâ By MARK SPITZNAGEL The Wall Street Journal NOVEMBER 6, 2009 Ludwig von Mises explained how government-induced credit expansions led to imbalances in the economy. Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today. Mises's ideas on business cycles were spelled out in his 1912 tome "Theorie des Geldes und der Umlaufsmittel" ("The Theory of Money and Credit"). Not surprisingly few people noticed, as it was published only in German and wasn't exactly a beach read at that. Taking his cue from David Hume and David Ricardo, Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen. Government-imposed expansion of bank credit distorts our "time preferences," or our desire for saving versus consumption. Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption. Ordinarily, any random spikes in credit would be quickly absorbed by the systemâthe pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse. The system is dramatically susceptible to errors, both on the policy side and on the entrepreneurial side. Government expansion of credit takes a system otherwise capable of adjustment and resilience and transforms it into one with tremendous cyclical volatility. "Theorie des Geldes" did not become the playbook for policy makers. The 1920s were marked by the brave new era of the Federal Reserve system promoting inflationary credit expansion and with it permanent prosperity. The nerve of this Doubting-Thomas, perma-bear, crazy Kraut! Sadly, poor Ludwig was very nearly alone in warning of the collapse to come from this credit expansion. In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming "A great crash is coming, and I don't want my name in any way connected with it." We all know what happened next. Pretty much right out of Mises's script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed. The brittle tree snapped. Following Mises's logic, was this a failure of capitalism, or a failure of hubris? Mises's solution follows logically from his warnings. You can't fix what's broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don't encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses failâno bailouts. (You see where I'm going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher. Mises started getting some much-deserved respect once "Theorie des Geldes" was finally published in English in 1934. It is unfortunate that it required such a disaster for people to take heed of what was the one predictive, scholarly explanation of what was happening. But then, just Mises's bad luck, along came John Maynard Keynes's tome "The General Theory of Employment, Interest and Money" in 1936. Keynes was dapper, fresh and sophisticated. He even wrote in English! And the guy had chutzpah, fearlessly fighting the battle against unemployment by running the currency printing press and draining the government's coffers. He was the anti-Mises. So what if Keynes had lost his shirt in the stock-market crash. His book was peppered with fancy math (even Greek letters) and that meant rigor, modernity. To add insult to injury, Mises wasn't even refuted by Keynes and his ilk. He was ignored. Fast forward 70-some years, during which we saw Keynesianism's repeated disappointments, the end of the gold standard, persistent inflation with intermittent inflationary recessions and banking crises, culminating in Alan Greenspan's "Great Moderation" and a subsequent catastrophic collapse in housing and banking. Where do we find ourselves? At a point of profound insight gained through economic logic, trial and error, and objective empiricism? Or right back where we started? With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt. And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one. How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale? Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments LP, based in Santa Monica, Calif. http://online.wsj.com/article/SB10001424052748704471504574443600711779692.html?mod=googlenews_wsj .
. November 9, 2009 SouthAmerica: Since I wrote that posting in February 2008 a number of new corporate scandals it has emerged such as the demise of Lehman Brothers (with self-serving help from the members of the Goldman Sacks Network), Citigroup, Merril Lynch scandal, Bear Sterns, AIG, and many other financial institutions went out of business and its pieces were absorbed by a number of American institutions that are not in sound financial shape themselves. Last Friday November 6, 2009 I was listening on Bloomberg radio a financial analyst talking about his latest report on GE stock â and he said that if they had not changed the rules on mark to market accounting to help create the illusion that these financial institutions are doing much better than they really are then GE would have had to book real estate losses in 2009 in the range of $ 5 to $10 billion dollars. The financial institutions are creating these artificial Mickey Mouse earnings and they are going to pay themselves a ton of money in bonus for 2009 based on these make believe earnings. And many people still have the nerve to say that capitalism is a very efficient system for allocating scarce capital. Wall Street screwed not only Americans, but also people from around the world with its financial scams, and history is repeating all over again. *** February 7, 2008 SouthAmerica: I wrote about this subject on various articles in the last few years, but as we approach very quickly the beginning of the New Great Depression it is worth to review some relevant information. This it is just a reminder to give people a chance to prepare for the coming hard times. Over seventy-five years ago, we had a market collapse in Wall Street. The market started collapsing on Black Thursday, October 24, and again on Black Tuesday, October 29, 1929. The "Great Depression" followed. Following I am quoting part of an article that I wrote at the end of 2002, In that article I mentioned that the USA had to start a war (any war) in an attempt to delay the start of the coming "New Great Depression." ***** I am quoting from one of my articles (the original article was 9 pages long) published in January 2003: "Getting Ready for War" â¦Few years ago many economists claimed that they had tamed the economic cycle, and that deep recessions and depressions were things of the past. When I read articles about that, I thought they were completely wrong. The truth is the world is overdue for a new economic depression. Historically we had a depression in the world once every 55 to 60 years. The last world depression was over 60 years ago. A Russian economist, Nikolai Kondratieff, published a study in 1926 showing that a very long-term economic cycle existed. His major premise was that capitalist economies had a pattern of long wave cycles of boom and bust. The bust cycle repeated itself approximately every 60 years. If you had read Kondratieff's paper in 1926, you would have known that an economic depression was around the corner. Kondratieff identified four distinct phases the economy goes through during each cycle: 1) Inflationary growth, 2) Stagflation, 3) Deflationary growth, and finally 4) Depression-falling prices, falling stock prices, falling profits, debt collapse. As the stock market is collapsing, a number of corporate scandals emerge such as Enron, WorldCom, Global Crossing, Adelphia Communications, Arthur Anderson and many others. As the debt load reaches new highs in the economy, the result is a record-breaking number of personal and corporate bankruptcies, as is the case in the US today. â¦In the past, a major war was the way out of an economic depression. Maybe that solution will be used by the US one more time to restart its economy - a major war contributes to ending the depression phase, and leads the economy to the first phase of the cycle once again. The big war has to be started somewhere even in Iraq. **** I wrote the following on October 29, 2004: ⦠Many economists still are debating today about the causes of the "Great Depression." Quoting from article published on the "Financial Times of London" Oct 22, 2004: "â¦Most scholarship has focused on the broad causes, with less study of what was the most important feature to anyone living through the crash: the juddering of prices up and down, sheer confusion and risk. â¦Mainstream economists are not much closer now to understanding volatility in markets than they were 75 years ago." ⦠Usually Americans make programs for television to commemorate any minor event that people can imagine. But today is the 75 birthday of the stock market crash of 1929, and there is very little mention of that event in any program on American television. The American media are aware of the precarious situation of the entire American economic system, but nobody knows what will trigger the collapse of the house of cards. Just to be in the safe side the American media is not saying much about the stock market crash of 1929. ⦠One of the triggers of the stock market collapse of 1929 was margin call on stock purchased on credit. (In 1929 people could buy a lot of stock on credit with a small amount of cash.) Margin calls it was a major problem in the stock market crash of 1929. Today, the equivalent to margin calls in 1929 is "Derivatives." The Derivatives market today, it is estimated to be over 100 trillion US dollars. This time around, "Derivatives" will be the trigger to a massive stock market collapse. Any way, today we are away overdue for a new stock market crash, and worldwide depression. Here it is a current example of things to come; The Big Meltdown!!!!!!!!!! ⦠Here is why the coming depression is a sure bet. I like to quote some information from one of my published book as follows: (Quoting from pg. 21) "Unrealistic Expectations. There is much evidence that human expectations tend to be linear. Most of the time, most people expect current conditions to continue for the indefinite future. It is almost an unnatural act for a man to leave home with an umbrella on a sunny day. Call it optimism, faith in the future, or just reluctance to see the party end, there is a presumption that the environment is stable. This is why cities are built on floodplains and fault lines. A similar presumption makes the gambler double his bet or the farmer plant additional crops on reclaimed land the year after a good harvest. Whenever prosperity exists, it is natural for people to expect prosperity to continue. For this reason, much of the history of human society is a record of astonishment. Time and again, people have marginalized their affairs, rendering themselves increasingly crisis-prone. They have gone into debt, extending claims on resources to an extreme that could be supported only if current conditions were sustained uninterrupted into the future. Time and again these hopes have been disappointed. Whenever prosperity has seemed permanent, some apparently minute change could produce astonishingly large nonlinear shifts in the organization of human society. The failure to recognize or anticipate these nonlinear transformations has been a common characteristic of almost all societies. â¦When the dynamic and nonlinear world adjusts itself to the linear thinking used daily by governments and other institutions such as corporations, banks, insurance companies, the church, and so on, the result can be sometimes catastrophic and can translate into unemployment, inflation, monetary devaluations, market crashes, world wars, civil wars, depressions, and even chaos. â¦Change is a fact of life, yet many people don't want to think about it because they feel threatened by it. So when change comes, it takes them by surprise. By then they can only react to it, and unless they're lucky, they suffer losses." http://www.elitetrader.com/vb/showthread.php?s=&postid=1782317&highlight=1926#post1782317 .
. June 28, 2010 SouthAmerica: I am glad that an economist of the caliber of Paul Krugman had the courage of writing an article and recognizing that we are descending into a new Great Depression. I have been writing about that subject for years, and finally I have a heavyweight and someone who I respect his opinions confirming my point of view on this subject. ***** Itâs 2008. The U.S. Has Dragged the World into a Depression. http://www.elitetrader.com/vb/showthread.php?s=&threadid=124509 ***** The Third Depression By: Paul Krugman Published: June 28, 2010 The New York Times Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as âdepressionsâ at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31. Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline â on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses. We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost â to the world economy and, above all, to the millions of lives blighted by the absence of jobs â will nonetheless be immense. And this third depression will be primarily a failure of policy. Around the world â most recently at last weekendâs deeply discouraging G-20 meeting â governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, todayâs governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer. But future historians will tell us that this wasnât the end of the third depression, just as the business upturn that began in 1933 wasnât the end of the Great Depression. After all, unemployment â especially long-term unemployment â remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps. In the face of this grim picture, you might have expected policy makers to realize that they havenât yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy. As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isnât doing much better. The Fed seems aware of the deflationary risks â but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity â but because Republicans and conservative Democrats in Congress wonât authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels. Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And itâs true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-linersâ medicine. Itâs almost as if the financial markets understand what policy makers seemingly donât: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating. So I donât think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again. A version of this op-ed appeared in print on June 28, 2010, on page A19 of the New York edition. http://www.nytimes.com/2010/06/28/opinion/28krugman.html?scp=2&sq=paul krugman column&st=cse .