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Saturday, July 27, 2013

18 similarities with 2008

Tyler Durden sees it happening again:
#1 According to the Bank of America Merrill Lynch equity strategy team, their big institutional clients are selling stock at a rate not seen "since 2008".

#2 In 2008, stock prices had wildly diverged from where the economic fundamentals said that they should be.  Now it has happened again.

#3 In early 2008, the average price of a gallon of gasoline rose substantially.  It is starting to happen again.  And remember, whenever the average price of a gallon of gasoline in the U.S. has risen above $3.80 during the past three years, a stock market decline has always followed.

#4 New home prices just experienced their largest two month drop since Lehman Brothers collapsed.

#5 During the last financial crisis, the mortgage delinquency rate rose dramatically.  It is starting to happen again.

#6 Prior to the financial crisis of 2008, there was a spike in the number of adjustable rate mortgages.  It is happening again.

#7 Just before the last financial crisis, unemployment claims started skyrocketing.  Well, initial claims for unemployment benefits are rising again.  Once we hit the 400,000 level, we will officially be in the danger zone.

#8 Continuing claims for unemployment benefits just spiked to the highest level since early 2009.

#9 The yield on 10 year Treasuries is now up to 2.60 percent.  We also saw the yield on 10 year U.S. Treasuries rise significantly during the first half of 2008.
It's just a matter of time.  Of course, that's been true since I published RGD in 2009 due to the mathematical inevitabilities involved.  The difference is that it's a matter of considerably less time now.

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29 Comments:

Anonymous Idle Spectator, Economist Extraordinaire July 27, 2013 9:17 AM  

It will be different this time, since we have learned so much since 2008.

Anonymous harry12 July 27, 2013 9:43 AM  

.
KD writes, "Metallurgical coal has declined in price by some 50%. That's an excellent indicator of forward demand for refined metals (steel, primarily.)

To Hell with the increasing unemployment benefit figures, the empty houses and the rising number of delinquent mortgages, what REALLY worries me: McDonald's reported earnings are 'flat'.
.

Blogger Jordan179 July 27, 2013 9:59 AM  

This is going to be where the country really pays for its self-indulgent election of 2012, and for Obama in general. Specifically, Obama has been choking off energy production, and energy production is ultimately the basis of all economic activity. Think about all the Gulf oil we could have been extracting.

Anonymous Roundtine July 27, 2013 10:15 AM  

Another thing I noticed the other day: the financial sector is only 3% smaller than the technology sector in the S&P 500 Index. That should not be the case, that post bubble the epicenter of the bubble reflates. Technology has been doing poorly and financials just had a strong quarter of earnings (objective not as strong, but the market it rewarding financials), so they could pass tech sometime in the next month or two.

Blogger Penrose July 27, 2013 10:15 AM  

It will be different this time, since we have learned so much since 2008.

Lozlzozlzlollolol

Anonymous Will Best July 27, 2013 10:35 AM  

This is going to be where the country really pays for its self-indulgent election of 2012, and for Obama in general.

the option in either 08 or 12 wasn't exactly compelling. I doubt McCain would have been any better than Obama, and Romney, while smart and capable, sold himself to the GOP establishment.

It will be different this time, since we have learned so much since 2008.

Actually the young have. Apparently its all woe is me in the financial service sector because Millennials are more likely to manage their own financials and the result is that Millennials have the largest cash position on average (nearly 30%) of any generation and the smallest amount committed to stocks (also about 30%).


Anonymous Roundtine July 27, 2013 10:48 AM  

It will be different this time, since we have learned so much since 2008.

People will not expect asset prices to go back up as they did in 2008. This time, they will know it is a Great Depression. They will despair and there will be no halting the decline. As Rodimus said, "This is the end of the road, Glavatron!"

Anonymous Will Best July 27, 2013 10:48 AM  

ZH has been calling for collapse for 3 years. Given that since WW2 we have a recession about every 6 years we are pretty much in broken clock territory.

I think we have enough juice to plod along like this for another year or two, and then it will be time for another recession. Though I suspect this girl Obama is rumored to appoint to the Fed will be under orders to stave off a recession until after he is out of office.

Blogger Jordan179 July 27, 2013 11:14 AM  

This is a Great Depression. We're almost exactly a full Strauss-Howe cycle since the 1930's, and what's coming will be the global war.

Anonymous Stg58/Animal Mother July 27, 2013 11:45 AM  

Jordan,

Energy production is at an all time high.

Anonymous Just Some Guy July 27, 2013 12:15 PM  

I got out of the market just before the '08, and put the wad into real estate, which is safe haven here in Texas. I am about to liquidate half of this and use it to a) buy new equipment for our family business and b) purchase our getaway property in rural France. Later, I intend to buy a rental property in Latin America (probably Uruguay) and use the income from that for an early retirement. One can live well for a surprisingly small amount in rural France, and it is Muslim-free.

Anonymous Anonymous July 27, 2013 12:21 PM  

"One can live well for a surprisingly small amount in rural France, and it is Muslim-free."

Just 2 questions: When the Shit Hits the Fan, how are you going to get there? Have you ever read "The Camp of the Saints?"

- Folio

Blogger El Borak July 27, 2013 12:36 PM  

Vox: What do you think of Martin Armstrong's Economic Confidence Model?

Anonymous Will Best July 27, 2013 12:39 PM  

@ Just Some Guy

I was looking at Chile for my getaway because I figure when SHTF I don't want to be in the 1st world. What does rural France offer you that rural US doesn't? is the land just cheaper? or do you think the French aristocracy will be more accommodating than their US counterparts?

When the Shit Hits the Fan, how are you going to get there?

About 2-3 ounces of gold per family member should be sufficient to buy passage.

Anonymous Matthew July 27, 2013 1:10 PM  

Just Some Guy: "One can live well for a surprisingly small amount in rural France, and it is Muslim-free."

Have you read about what happened to Varg Vikernes in rural France?

Anonymous Anonymous July 27, 2013 1:11 PM  

"About 2-3 ounces of gold per family member should be sufficient to buy passage."

Good luck. I hear that may buy 1st class seats on the dirigibles, Inshallah...

- Folio

Anonymous Geoff July 27, 2013 1:35 PM  

Citizens of rural France aren't armed.

That might matter.

Blogger Penrose July 27, 2013 1:44 PM  

Citizens of rural France aren't armed.

And they're white.

Anonymous Anonymous July 27, 2013 1:57 PM  

"And they're white."

They'd better get some firearms for hunting. You know, to feed the family in hard times, protect the livestock.

- Folio

Anonymous Augustina July 27, 2013 2:16 PM  

Idle Spectator, you win the nobel prize!!

Energy use is a good indicator of economic activity. Locally, two electric generating plants were just shut down. One after nearly a billion dollars was spent to upgrade it. Yes, the Obama war on coal is a factor, but the power company said the real problem was that electric use simply isn't growing. It has remained flat for years and is at 2007 levels.

Blogger James Dixon July 27, 2013 3:45 PM  

Well, wrt the stock market, we are at an all time high (though I don't believe we are after inflation). After this much of a run up, a sell off of 20-50% can be expected at any time. And this happens all the time even without government interference. I put a lot more weight in the other things he lists.

> ...and Romney, while smart and capable, sold himself to the GOP establishment.

Sold? He's been part of the GOP establishment pretty much his entire life.

> ...but the power company said the real problem was that electric use simply isn't growing. It has remained flat for years and is at 2007 levels.

That's what I'm seeing and hearing also. Energy use (which is a very good proxy for economic activity) seems to have been down to flat this entire time. There has been no recovery. And the only reason jobs have picked up recently is Obamacare.

Anonymous Anonymous July 27, 2013 9:56 PM  

#5 During the last financial crisis, the mortgage delinquency rate rose dramatically. It is starting to happen again.

Of all the warning signs indicated, this one is by far the most ominous. Consider that they have stopped giving loans to part time maids to buy McMansion's, They have stopped giving no money down loans. By all rights these should be loans being granted conservatively to the middle class. And if the delinquency rate is up, the middle class is breaking....


- Azimus

Anonymous Roundtine July 27, 2013 9:59 PM  

Have you read about what happened to Varg Vikernes in rural France?

Varg Vikernes qualifies as a terrorist in rural France. Just like Toby Keith qualifies as a terrorist in Paris.

Anonymous FUBAR Nation Ben July 27, 2013 10:04 PM  

The stage is a set for a massive rally in the US stock market and US dollar. Money is going to flood into both those markets, driving up interest rates.

Anonymous Just Some Guy July 27, 2013 10:26 PM  

Anonymous July 27, 2013 12:21 P: Just 2 questions: When the Shit Hits the Fan, how are you going to get there?

The Shit seldom hits the Fan all at once. It arrives in dribs and drabs. I plan to gradually shift my life to the safe haven as the flux ramps up, maintaining my life and business here until the amount hitting the Fan becomes excessive. Only if certain criteria are met here in the States (e.g., gun confiscation) will an automatic bugout will be triggered, sending my family to safety elsewhere. I will, of course, remain behind in order to do my patriotic duty.

Have you ever read "The Camp of the Saints?"

Many times.

@Will Best July 27, 2013 12:39 PM: I was looking at Chile for my getaway because I figure when SHTF I don't want to be in the 1st world.

Chile is an excellent option.

What does rural France offer you that rural US doesn't?

France is a real nation, defined by ethnicity, language and culture and held together by centuries of tradition. The United States (depuis 1865) is an artifice defined by a parchment and a flag, and held together by brute force. Which entity do you suppose will be better suited to survive if TSTF?

As is the land just cheaper? or do you think the French aristocracy will be more accommodating than their US counterparts?

Real estate à la France profonde is surprisingly affordable, and the general cost of living in the location I've selected is low. One need not, for example, own a car there. And the place I'm going is a rural village surrounded by working farms and ranches, with abundant fruit in season, game, and water.

As for the French aristocracy: surely you do not imagine that the ancien regime still holds power in France?

Matthew July 27, 2013 1:10 PM: Have you read about what happened to Varg Vikernes in rural France?

The antics of devil-worshiping heavy metal losers do not interest me.

@Geoff July 27, 2013 1:35 PM: Citizens of rural France aren't armed.

Are you sure? How do you know? Have you ever been to France? You might find the situation of the citizens of rural France to be much different than you imagine.

In any case, the key to successful disaster preparedness is flexibility. I have a menu of options for TSTF Day, a day which I hope will never come.

Anonymous The other skeptic July 27, 2013 10:31 PM  

Seems that it was just a matter of time before another diverse burgler was shot in Florida as well.

Anonymous Will Best July 28, 2013 10:37 AM  

As for the French aristocracy: surely you do not imagine that the ancien regime still holds power in France?

I subscribe to the theory that when the collapse comes, representative government will be replaced with some sort of oligarchy.

Anonymous Just Some Guy July 28, 2013 10:49 AM  

Will Best July 28, 2013 10:37 AM: I subscribe to the theory that when the collapse comes, representative government will be replaced with some sort of oligarchy.

If you are implying la Cinquième République is in any way "representative" of the people of France you are mistaken. The current French government is representative of the will of the French people in the same fashion that the American people are "represented" by the current U.S. government.

The French aristocracy is not extinct. The House of Orleans, the House of Bourbon, and even the House of Bonaparte all exist. Louis XX is alive and well. Sooner or later, the republican government of France will fall. When it does, it is my guess that one of these royal houses will be restored and the nation of France will once more be a kingdom.

Anonymous The other skeptic July 29, 2013 10:23 AM  

Depositors lose 48% if over the $100,000 EU level.

A warning shot.

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