Being a PITA again --Junker prediction part II: not so good.

[cosmicaug]

I'm still being a PITA and looking back at Junker's predictions. I'm referring to the thread at http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=4770 . The first part of this one looked to be possibly good. The second part is not so good.

We should have already seen the "dive into the tank" stage of the prediction. Instead, it looks like the Dollar has been going mostly up since about the 17th..

[junker]

1. Yep. Mea culpa. Wrong. Who knew TPTB would

fight this hard, or expend this much of their remaining 'ammo' to prop up the buck. Or that the BOJ would acquise to printing 580 billion yen out of thin air to attempt to prop the buck at the risk of their own citizens' savings?

But, this timing push upward aside, the down side, when it comes will be much more severe, and sharp than I had anticipated. This is based on the huge, and I MEAN HUGE, amount of intervention and risk the central banksters are taking in this approach.

In a real serious vein, if one reads between the lines of the global CB communities actions of late, it appears that they are truly, and terribly, down to the bone, afraid. I think, making an educated judgement (never let my schoolin' interfere with my education) or guess, that the CBsters (including Uncle Sugar Al Greenspan) are actually afraid at the level of their own phyiscal safety.

I am suggesting that the amount of it, and the speed of the fan are far greater than initially realized...so the resulting fall is likely to be far worse than anticipated.

Yessir. Got it wrong. I figured TPTB would fight a retreating action as the dollar fell off the cliff. Kind of like those cartoons where the characters shuffle their positions relative to each other as they all fall from the precipice. But instead the buggers have done a 'throw everything in the arsenal at it in one final offensive' attack...hoping for....?

I am frequently wrong. Likely more wrong than chance would allow. But in my favor/defense, I am out there thinking and working this stuff, and when correct (like selling MS stock less than 3 dollars under the all time high), I am frequently spectacularly correct. This time, at least to the resultant, I am really really really sure I am correct. The dollar, inspite of recent action seeming to indicate the contrary, is dying of the weight of the accumulation of 90 years of debt on it.

I am never in for just a little bit of anything. In it at all, then I am in it at the biggest ki level I have. So of course the failures are spectacular as well.

Only thing is, there is very little downside to assuming I will be correct in the resultant.

[papau]

3. A interest rate cut in the EU won't change the forecast?

?

?

http://www.ecb.int/stats/eurofxref/eurofxref-graph-usd.html

http://www.ecb.int/stats/eurofxref/eurofxref-graph-usd.html

[rapier]

4. notes

I bashed junker a few time. My main point was that his timing was almost certainly wrong. It isn't that I know when or what direction markets will move it is that gigantic moves several times greater than the standard diviation are so rare that the probability that one will occur any one prescirbed week or month is vanishingly small. I might seem like a wise guy depending simply on the law of averages to dubunk his predictions. Sorry. It would do him and others well to understand that markets, like most things, are determined by chance. Or to put it a better way, future events are not determined in any exact way in a complex system.

I believe we are in a period that WILL see great shifts in our conception of the economic reality. I belive this will be both because of things internal to economic markets, like too much debt and an explosion in the quantity of money, but also perhaps because of things external to the markets like politics, war, environmental condition including energy supplies, etc. etc.

How this will play out on prices I cannot say. Nobody can. The great debate among those like me who are very bearish on the economy and our economic culture is between those thinking deflation will afflict most prices, especially the prices of financial assets and real estate, and those thinking a great inflation may occur. Maybe it will be a mix of these. In any case knowing which prices will rise and which will fall is open to guesswork, not knowing.

On currencies the devil is knowing which piece of paper is really deserving more 'value' than any other. It's a fools errand trying to figure it out. In all probability it seems that now the EU, thru their central bank will begin to play the dollar buying game. Or maybe it should be called the destroy their own currency game. Every nation seems intent upon wrecking their own currency and the method used by all ends up being the same. That is producing more of it. That means especially producing more dollars.

This flood of dollar liquidity is what is holding asset prices high now. Can it continue? It sure can. Forever? No. The CRB commodity index is at a 20 year high today. The price of things, not just stocks and bonds ie. financial paper, is now inflating. This seems inevitable given the vast increases in money extant. If the powers that be can keep this and other signs of inflation in check then I would expect things to limp along in a not extraordinary way for a while longer.

[junker]

5. Sorry, you are wrong. Chance does not enter into it at all. Correct about

complex systems though. However note that the markets, a construct of human abstraction with a layer of process laid on top, while complex by nature are not chaotic (though elements of chaos do intrude), and as such are predictable at many levels. Chance does not enter into it at all. In fact, if one examined our market processes, they have been designed/evolved toward removing chance at every opportunity.

When I had socially redeeming employment (with two of the largest universities on the planet and several of the largest of multinational corpo's) my work was mainly in providing approaches to complex system understanding and hopefully management. Oh, and along the way, producing software as required for such understanding.

Many large scale shifts (in fact probably most) are predictable, sometimes years in advance. For instance, I am aware of persons who 'knew' in 1999 that Bush would be installed, and that as a directly predictable consequence, the USofA military would be involved in a war in Iraq against SH. What they did not foresee was the alteration of that 'adventure' into a war between the USofA miliarty and the Iraqi citizenry, and greater muslim radical population. However, the steps that they took in 1999 have proven profitable for them.

As to their predictive timing, well, in two cases they 'knew' that war would occur within the 4 years, and after that deduced that it would take at least X amount of time to get the momentum moving so had it pegged between end of 01 and middle of 03. This absent the idea of 9-11 attack. That such an attack occurred, and was seized upon by the bushonians was not seen in advance, but from these persons perspective, it did not matter for the goals they were attempting in 1999 and 2000. So they were quite content with a 2.5 year predictive range regarding certain fiscal issues.

Me, I go out on a ledge, and once there, dance about tempting the fates. I have not the resources (poor bastard that I am) nor patience for these 2 year windows. My kick comes from seeing how close I can nail it to the minute. Of course there are necessarily wrong predictions.

On the other hand, if certain changes are seen coming, even from such a distance that the timing is imprecise, and appropriate action is taken, does it matter if the timing is off by some margin? Likely not.

[rapier]

7. notes

I have to disagree but it's not the time and place to argue philosophy I guess. At least I don't have the time and while DU might have the space it would probably bore the hell out of everyone. I will note that the easiest prediction about post invasion/fall of Saddam Iraq was civil war. I was strongly confident in that probability.

As to predictions of Japans Ministry of Finance ending their Yen selling/dollar buying mania, that has been wrong. They have sold 3.3 trillion yen in Feb.
http://quote.bloomberg.com/apps/news?pid=10000101&sid=abgnCesLtAiU&refer=japan


Let me restate that the EU is in all likelyhood going to embark on their own dollar buying regiem soon, if they haven't already. The great currency creation/liquidity machine continues to gain speed. EVERYONE is intent upon debasing their currency. Again I ask what is the sense of trying to figure out which piece of crap currency is 'worth' more?

Is the Yen really deserving of strength against the dollar? Look at these charts. (From a gold bug website I do not endorse per say, nor do I endorse even this conclusion. Just pointing out something) The dollar is near a 50 year low against the yen. This is a trend that to say the least has been long and powerful. Simple common sense says that every trend reverses eventually. Japan I should note is the worlds second largest economy. If one thinks of a currencies strengh in terms of prudent fiscal and monetary policy the Yen deserves a place alongside Argentina perhaps or some other widely scorned nations. We are not so great in that regard either but Japans thing now is totally insane.
http://www.gold-eagle.com/editorials_04/eidetic022404.html


I just think that relative currency values won't be the source of a systematic crisis. A systematic crisis would come perhaps from a rejection of all currencies, the gold bug case, or by some other means. I'm in the some other means camp but what those means will be I don't know. Ultimately I think it will pertain to credit defaults, probably in the derivatives sphere. That opaque description is a cop out I guess. This moment I would guess that inflation in basic goods and commodities will throw a wrench into US consumption, which is the lynchpin of worldwide 'growth'.

[junker]

2. news from china...say good bye to the buck.

More news tidbits from China: Gold trade opens to individuals

See: http://english.peopledaily.com.cn/200311/19/eng20031119_128568.shtml

"The Bank of China (BOC), one of the four big state banks of China, opened gold trade services to individuals on Tuesday in Shanghai. Individual investors can now trade the precious metal at 95 business outlets of the BOC Shanghai Branch, or dial 95566 to make transactions or on-line trading at www.sh.bank-of-china.com. To encourage more individuals to participate in the gold trade, the BOC set 10 grams of gold as the lower limit for trade."

I think I'm going to be awake all night trying to guess how many ounces of gold 1.2 billion people are going to buy next year.
******************

My point is the chinese will be using their dollar hoard to purchase all that gold. Called stealth 'repatriation'.

[brokensymmetry]

6. Interesting ideas.

The only thing that concerns me about the prediction of a dollar decline is that everyone seems to be making the same prediction. The Economist, for one example, expects a substantial move down.

But when most expect a move down, the markets generally don't accomodate.

Still, I (for one) enjoy reading your thoughts.

[junker]

8. Systemic crisis trigger is building in the developing silver short squeeze

I am reading about differentials of over 21 US$ per ounce. Delivery of 100 oz bars in OZ are requiring payments of AUSBucks at an equivalent to 21.82 USD at current. And of course, no 100 oz bars to be had. Same is shaping up in the Hind as well as border areas of paki/chine. Usuall baksheesh is falling as there is no silver to smuggle. Gotta know a physical shortfall is developing if the smugglers are going broke cause no one is moving metals...

so banksters face issues relative to the COMEX ponzi scheme and its sudden exposure to insolvency when it breaks that ALL the silver in the world is spoken for.

Also the largest refiner of silver on the planet in Mexico says all its production is 'booked' for the next X years.....that is NO SLACK.

going to be interesting to see how the big shorts (including a nice clump of the top 14 banks in the world) handle this..

[brokensymmetry]

9. And yet...

I put "silver bullion" into google and saw a number of dealers. One offered 100oz bars at 40 cents over spot. According to Monex, the high on Friday was $ 6.77 USD - so this seems to imply a price of under $7.25 per oz. for each bar.

Why wouldn't someone do an arbitrage on something like this?

BTW - I'm not saying I don't believe in an incipient monetary crises, I just like to develop an understanding of the situation.

[junker]

10. Google listings don't mean squat. Try and obtain delivery of

any amount of 100oz bars immediately. In our area of PNW, local dealers have very little supply. One in Fife/tacoma area says he can supply 1000oz....only he can't. He can only place an order and await delivery himself as he only has 100oz in loose coins around.

Same is true of trying to get 10k oz (a friend of mine with a job - govt work - is freaking out and trying to convert his 401K to silver as fast as possible due to his recent trips to dc as part of his work.) out of a private silver mint in Idaho. They say they will take the order, but when pressed cannot give a firm delvery date any closer than a month. In other words they told bob that if he ordered on monday that they can give him delivery sometime in June...

now that is odd. Usually these guys had inventory sitting around for small orders like 10k oz....

so...

google may say yea, but my local coins stores here in south Puget sound say 'ain't got none'...