Comments on: Is A Global Financial Meltdown Imminent?

By: Chad @ Sentient Money

Chad @ Sentient Money — Sat, 07 Mar 2009 02:55:02 +0000

“But Ferguson predicts more political unrest.” – No shit Ferguson. Going out on a limb there. By the way, I’m not making fun of the poster. The prediction by that economist just seemed rather unnecessary.

By: MoneyEnergy

MoneyEnergy — Tue, 24 Feb 2009 19:42:53 +0000

Well, talk about the Great Depression and a bigger collapse have only increased in the last two-three trading days… another good opinion to take a look at is Harvard’s economist Niall Ferguson. Interesting views on “Chimerica” and how the rest of the world is going to get hit harder than the US, ironically, and very sadly. Canada’s going to hang in there with the US since it’s its largest single trading partner. But Ferguson predicts more political unrest. There’s a link to his article (an interview in the Globe and Mail) on my twitter feed.

I’m starting to change some of my own investment strategies to take more into consideration the possibility of a greater downturn. We can’t just act like nothing has changed, because I think something has.

By: Brian McMorris

Brian McMorris — Sat, 21 Feb 2009 14:58:54 +0000

The net value of the derivatives market is unknown. I have seen reports about hundreds of trillions, but the derivatives are on both sides of the equation (as in options which have puts and calls that offset). You cannot add together both sides to determine the true exposure. It is so large, obscure and complex, I don’t know that anyone really knows the true amount (much of which has been unwound the past 18 months).

But the derivatives exposure is the entire case for gold right now. The uncertainty around the global financial crisis is why gold makes a good SHORT TERM bet. Once that uncertainty is resolved the panic value of gold will disappear and the price will crater since it is a very crowded trade and will become more so.

If the central banks are successful in reflating depressed economies, and so far their efforts to print money to offset debt unwinding has not been adequate, at that point we can worry about inflation. But inflation is no sure bet. They tried mightily in the 1930s to create inflation and were unsuccessful. It is the very least of worries right now. It is very difficult to print enough money, and get people to use it, during a major debt unwind like we are going through. To put a point on it: Money Velocity is near zero right now.

By: Max

Max — Fri, 20 Feb 2009 22:03:14 +0000

You don’t seem to be too concerned about the derivatives-market?? 700 trillion is alot of money… I got two posts on my blog explaining it fairly concisely.

By: Brian McMorris

Brian McMorris — Fri, 20 Feb 2009 20:20:23 +0000

Correction Nirav, If ever there was a time to invest in gold, it was 2001 when gold was at $250 an ounce. Now, the gold run is somewhat long in the tooth. It has become the trendy trade. It is never good to follow the crowd in investing. Yes, gold could spike up to $5000 an ounce based on fear and panic. But it would be just that, a spike. Most will get caught in gold as it collapses, as it has every single time before for the past several hundred years.

This financial crisis is somewhat a recurring event. If you follow Elliott Wave Theory, you know that there is a long wave that repeats on an 80 year cycle. The reason for the length of the cycle is probably that it is the length of average human life (everyone gets to experience one of these once in their lives).

Check out my blog for a post on the dangers of gold as the fear peaks: http://www.wealth-ed.com