The Coming Crash (no later than 1H2012)?

[Behappyalways]

Greek Tragedy
http://www.nytimes.com/2012/02/09/opinio...ef=opinion

[Behappyalways]

selldown is good.....STI went up too fast....let's see if 2950 holds........

[swakoo]

Greek Tragedy
http://www.nytimes.com/2012/02/09/opinio...ef=opinion

Person who wrote this NY Times article, before writing this should study and understand how the Koreans dealt with a similar situation during the Asian Financial Crisis (and they did not have the benefit of an organisation like the EU to help bail them out too), taking their bitter medicine faithfully and turned things around completely.....

[Behappyalways]

A good read

(I think sooner or later Greece will default esp with EU now trying to impose 'sovereignty' over Greece. What would you choose if you are Greeks. Economic recession (if default) or economic recession plus loss of 'sovereignty'(if they choose to accept EU's demands)

.................................................

'I don't understand Chinese companies,' he says. 'I can see the growth, but Chinese stocks listed in the US have been a disaster for investors. It's a governance issue. It's a place where foreign investors have no rights. So I want to see the rule of law.

From The Business Times

Bearish guru
Widely followed investment guru John Mauldin talks to Vikram Khanna about the big risks facing the markets



'BY nature, I'm an optimist, but when I look at the data, I just can't ignore what it tells me, says John Mauldin, a best-selling author who is also probably the online world's most widely followed investment guru. His newsletter Thoughts from the Frontline - which analyses current events and their implications for investors - goes out to 1.5 million subscribers every week. He also has three bestsellers under his belt, and counting.




Based in Dallas Texas, but a big accumulator of frequent-flier miles, Mr Mauldin was in Singapore recently to promote his latest book, entitled Endgame. This is a starkly bearish 'end is nigh' treatise on the dire consequences in store for the global economy as the massive debt problems in Europe, the United States and Japan threaten to unravel.

What's written on the book jacket itself is sufficient to give investors the shivers. 'Greece is a basket case, Ireland is on life support and Japan a bug in search of a windshield. In the times ahead, the global sovereign debt and credit crisis will continue to spread like wild fire . . . Endgame provides the road map ahead.'

The book has won high praise from such diverse personalities as Mohammed El-Erian, CEO of Pimco; US presidential candidate Newt Gingrich and maverick Singapore-based investor Jim Rogers - all apparently Mauldin fans.

Renowned both as a speaker and a writer and with a reputation for being something of a perma-bear, Mr Mauldin is famously independent of mind, and outspoken - which partly explains his popularity among practical investors. As the writer of an independent newsletter, he owes no allegiance to any establishment or institution and doesn't bother to mince words, especially when he's critical, which is frequently.


Europe could make good decisions or the place could blow up. A decision the market would like would be for the European Central Bank to print a lot of money. They monetise the debt, a lot of money gets created and that money finds a home in stock markets.


At the moment, he is particularly critical of European governments, whose reassurances that all will be well in the end he views with deep scepticism.

'Van Rompuy said last fall that Greece will never default,' he points out, referring to the president of the European Commission, Herman van Rompuy who continues to offer hopeful prognoses for the eurozone. 'I do not understand why people listen to politicians. They have to say what they say. They have no choice but to tell you good news. If they tell you bad news, they're not doing their jobs.'

He also pooh-poohs European officials' complaints about Anglo-Saxon investors being too short-term focused and blind to the eurozone's reforms.

'They in Europe agreed 10 years ago not to run these deficits,' he says. 'They agreed to reduce their debts. They agreed many things. None of them did it.'

Nor does he buy the wisdom of the so-called fiscal compact, the German-championed idea to put legally-binding numerical limits on eurozone countries' deficit and debt levels. 'If they do that, it will mean even deeper recession in Europe,' he says.

His own prognosis for the eurozone is almost hopeless. 'There are three problems,' he explains. 'A bank debt problem, a sovereign debt problem and a trade imbalance problem. You cannot solve the European problem without solving all three of those. Solving just two won't be enough. And you cannot solve the trade imbalance problem with one euro, unless the southern tier of Europe goes into depression for five to 10 years, has very high unemployment, lowers its costs and becomes more productive relative to Germany. That's the theoretical solution. And that would be so painful.'

And so, the break up of the eurozone is Mr Mauldin's most-likely scenario. He reckons it'll take two to three years, but the process could start in 2012, with Greece making its exit.

'Greece will have to make a choice this year,' he says. 'And whatever Greece chooses will be a disaster. They don't have a good choice; they have a choice between disaster one, disaster two and disaster three.'

Stay in the eurozone without defaulting, stay and default, or leave the euro and bring back the drachma - all are bad.

'The government that chooses one disaster will become very unpopular, because everyone in Greece will say: 'You have led us into a disaster! We want a new government!' And so a new government will come along and say: 'We should have the drachma!' But that will be a disaster too.

'Well, I think it would probably be the best thing for Greece. It would be a disaster for 18-24 months. It would be like Iceland in a way - except that Iceland is smaller and the people pay their taxes.'

The abyss

But he wants to show what the abyss looks like: 'Let's look at what a country would have to do if it leaves the euro,' he says.

'First, currency controls. That might require a military government. It would need to physically close the borders. It would need to confiscate money. It won't have any hard currency to buy oil, medicines or other basic things. In the end, over time, the devaluation of the drachma will make them competitive. But it'll be two years of hell, at least.'

He believes that not only Greece, but also Portugal and Italy, among others, will either be forced to default or restructure their debts. 'I think there is a real chance of Europe going into a major recession and a banking crisis this year,' he points out. 'And it will drag most of the world down.'

Asia will not be spared, he warns. 'Europe is not only the biggest market for Asia, it is also the biggest supplier of banking and credit to Asia. European banks are much more important than American banks in financing world trade.

Mr Mauldin is only slightly less bearish about the United States. The chapter on the US in his book is subtitled 'The mess we find ourselves in'. 'Yes, there is an economic recovery going on. It's not strong, but it is a recovery. And if not for Europe, things would be better.'

But America must also deal with its gargantuan deficit and debt problems, and it has about five years. 'One way or another, by 2017 or 2018,' he says, 'either we choose to solve it ourselves or the market will force us.'

'The main problem is we have simply too much debt. And we don't have a functioning healthcare and social security system. We budgeted too much for them. There is literally not enough money to pay for what our politicians are promising.'

But you might ask: The US debt story is nothing new, is it? And the markets have so far been forgiving - they have not demanded higher interest rates from the United States.

'The markets were also incredibly forgiving of Greece, until last year,' says Mr Mauldin. 'In the case of the US, nothing will happen this year. But the markets will probably expect something to happen in 2013.

'We have less time than normal. Because investors will see Europe come apart. They might also see Japan come apart. And it'll be like going to a movie. The bond market will go to the movie called The United States, and they will watch the movie. And in the intermission, they will stand up and say 'we know how this movie ends'. 'We have seen it before. This is a disaster movie! We don't have to stay till the end. Is it okay if we leave?'

Bond investors 'leaving' could mean a plummeting dollar, followed by the Fed having to jack up interest rates, perhaps by a lot, followed by another recession.

But Mr Mauldin's prognosis for the US isn't hopeless, and certainly not as bad as for the eurozone. 'The US government needs to get its deficit under control over time,' he explains. 'It doesn't have to do it in one year - it just has to provide a credible path.'

For him a credible path would include big cuts in spending, a restructuring of the tax code which eliminates tax deductions (for example on mortgage payments) and farm subsidies and introduces a value-added tax, and then a cut in the top tax rate, which would revitalise small business.

Indeed, the US could see a big upside, if it does the right things.

'We need to wake up and start, as we say in Texas, punching holes in the ground for oil and gas. We have massive deposits of oil and gas offshore. We need to drill in Alaska and in the Arctic. We need to become energy independent. That will do two things. It will create hundreds of thousands of jobs. Even for the US, that would be a lot of jobs, and they'd be high-paying jobs and it would last for 20 years. We could actually become energy independent within five years. And that would make the dollar stronger, it would bring oil prices down, which would be a stimulus. It would have so many positive effects. We would also stop having to send money to regimes like Chavez in Venezuela and others who don't need our dollars. So, we have the options, we've just chosen not to take them.'

Long term, he believes the US has a great future. 'A lot of manufacturing is going to come back to the United States. Because the cost of manufacturing overseas is rising and you still have to get the product from here to there.

'Now, I don't think assembly is going to come back,' he adds. Holding up his iPhone, he says: 'Putting together this phone is not going to come back. It will always be done in China or wherever. But putting together equipment, high tech, things that we can do with machines will be done more and more in the US.

'Panasonic has one factory in Japan that makes 10 per cent of all the 42 inch TVs in the world. That's a lot of TVs. It has just 15 people. It's completely automated.'

The US can do that too, he says.

What then would happen to export powerhouses such as China which make much of their living by selling to rich countries?

'They will have to make more products that they want to consume; they'll become more of a consumer-oriented society. As more Chinese join the middle class, they'll want cars and refrigerators and air-conditioners and better food.'

Mr Mauldin is not worried about China as some observers are. 'People ask me, will China have a hard landing or a soft landing. I say that's a very boring question. Some day, China will have a recession. Big deal. China's hard landing was 1980, when it could barely feed its people. It was one of the poorest countries in the world with a big military. Today, there are more people living in China's cities than in its countryside. In 30 years, they have built dozens of cities that can accommodate five million people. From scratch! Never in the history of the world has that happened.

So my scenario for China? 30 years from now they'll be bigger, better, stronger and even more amazing. But so will the US.'

Mr Mauldin is running late for his lunch at the American Club where he will meet a group of investors. Before he goes, I ask the investment guru how he would allocate his investments in 2012.

Scenarios for Europe

What happens in Europe is critical, he says. 'Europe could make good decisions or the place could blow up. A decision the market would like would be for the European Central Bank to print a lot of money. They monetise the debt, a lot of money gets created and that money finds a home in stock markets.

'On the other hand, some countries could effectively declare bankruptcy, the situation could get ugly and the markets would fall out of bed. Either scenario is possible.

'So this year, your goal as an investor should be to not lose money. If you achieve that, you'll have done well. If you earn anything above zero, that's wonderful.

'I will buy some gold. I buy gold every month. And I take delivery - physical gold. It sits in a vault. I buy gold because it's insurance against stupid governments. It's like having life insurance, health insurance or car insurance. Gold is government insurance.'

Longer term, he's also interested in biotech, natural resources and energy stocks.

What about emerging market investments?

'I think right now, if Europe has a problem or the US has a problem, emerging markets will go down. Over time, they will decouple and become their own markets. I would then put more of my capital into emerging markets. I would be looking at Indonesia and Malaysia. Also, at Brazil, Chile and Colombia.'

I point out that he did not mention China or India.

'I don't understand Chinese companies,' he says. 'I can see the growth, but Chinese stocks listed in the US have been a disaster for investors. It's a governance issue. It's a place where foreign investors have no rights. So I want to see the rule of law.

'India - some good companies, not bad governance, but bad government and bad infrastructure. So, when China fixes its governance problems I will go into China. When India starts fixing its infrastructure, and focuses more on building things that allow businesses to grow, I'd consider India.'

Meanwhile, he's hoping his gold goes down in value.

'I really hope someday in the future it'll be worthless,' he says. 'Because that would mean my other investments would be doing very well.'

[arthur]

A possible near scenario goes:

Standing at the podium in front of the Greece parliament building, the Prime Minister spoke:

Never had our great nation be humilated by the EU as such! We are being subjugated by the Germans through their fiscal pacts. As much as what they did to the rest of Europe in the 20th century through their German boots!

We seek to perserve our way of lives.
No more pensions cuts! No more civil servants job cuts! No more raising of retirement age!
We want back our national sovereignity of being able to control our monetary policies. We want back the pride of using the Darchma in our everyday way of lives!

The participation of the EU in 1981 was a grave mistake! A mistake I intend not to follow on like my predecessor.
Lucas Papademos sold our great nation to the Germans again and again! Never shall I allow this to continue any longer!

(All around the world, eyes were tensely glued to the TV screens on CNN, CNBC, Bloomberg, etc. Noone spoke, esp the Germans, the EU Super Mario but most of all, the bankers from GS, JPM, DB, CS, UBS and many more who have hedged their bets towards the smooth payment of Greece debts and recovery of the EU economies.)

(Raising his right hand wavering to the massive crowds and international medias, there lies a copy of the European Union agreement)
Today!
I intend to correct this mistake!
With immediate effect, ALL debts will not be paid out anymore! We have paid more than enough to the Germans who have repeatedly plundered us!
The Darchma will replace the EU back in our everyday lives. We have send a notice of withdrawal to the EU council and member nations 30 mins ago.

We, the Greek, will be a proud and strong nation, like what we always have been in the history of man!
(Thunderous applause arose in the background. Meanwhile, bankers all around the world are scrambling to hedge or sell their portfolios while the EU president looked at the TV screen in horror, with his hand on telephone, having desperately trying to call into the Greek PM telephone line for the past half an hour.)


Sounds like some ficitious story lifted from some novels hur?
All it takes is one populist PM to be elected this year, who have the balls to default on the debts, with of cos overwhelming support behind him.

Repurcussion? Who knows? Russia and Argentina defaulted back then with no long lasting side effect. Hopefully it would be the same.

[Behappyalways]

Just for laugh

After the speech, Greece's Prime Minister received a phone call from Portugal and Italy's Prime Minister praising him and asking for permission to copy his speech. And a few days later, he received numerous phone calls from the Democracts and Republicans and was asked to represent their party for this coming US Presidential Election. They would be willing to pass laws to allow his running.

Hereby in Singapore, Nr Yaw Tee Goh got his inspiration from the speech and called his ah long to fly kite and he would not pay any more of his debts. He got two families to take care. One his family the other his mistress, Angela.....and third, and fourth....oops

A possible near scenario goes:

Standing at the podium in front of the Greece parliament building, the Prime Minister spoke:

Never had our great nation be humilated by the EU as such! We are being subjugated by the Germans through their fiscal pacts. As much as what they did to the rest of Europe in the 20th century through their German boots!

We seek to perserve our way of lives.
No more pensions cuts! No more civil servants job cuts! No more raising of retirement age!
We want back our national sovereignity of being able to control our monetary policies. We want back the pride of using the Darchma in our everyday way of lives!

The participation of the EU in 1981 was a grave mistake! A mistake I intend not to follow on like my predecessor.
Lucas Papademos sold our great nation to the Germans again and again! Never shall I allow this to continue any longer!

(All around the world, eyes were tensely glued to the TV screens on CNN, CNBC, Bloomberg, etc. Noone spoke, esp the Germans, the EU Super Mario but most of all, the bankers from GS, JPM, DB, CS, UBS and many more who have hedged their bets towards the smooth payment of Greece debts and recovery of the EU economies.)

(Raising his right hand wavering to the massive crowds and international medias, there lies a copy of the European Union agreement)
Today!
I intend to correct this mistake!
With immediate effect, ALL debts will not be paid out anymore! We have paid more than enough to the Germans who have repeatedly plundered us!
The Darchma will replace the EU back in our everyday lives. We have send a notice of withdrawal to the EU council and member nations 30 mins ago.

We, the Greek, will be a proud and strong nation, like what we always have been in the history of man!
(Thunderous applause arose in the background. Meanwhile, bankers all around the world are scrambling to hedge or sell their portfolios while the EU president looked at the TV screen in horror, with his hand on telephone, having desperately trying to call into the Greek PM telephone line for the past half an hour.)


Sounds like some ficitious story lifted from some novels hur?
All it takes is one populist PM to be elected this year, who have the balls to default on the debts, with of cos overwhelming support behind him.

Repurcussion? Who knows? Russia and Argentina defaulted back then with no long lasting side effect. Hopefully it would be the same.

[Behappyalways]

Portugal: Germany Promises Bailout Adjustment
http://www.stratfor.com/situation-report...adjustment


Europe is now deliberately trying to push Greece out
http://blogs.telegraph.co.uk/finance/jer...reece-out/

[Behappyalways]

Greece's Choices: Deep Cuts or Default
http://www.time.com/time/world/article/0...49,00.html

[Behappyalways]

S&P500 faces test

13th February: A bit of consolidation in the US and Europe. S&P500 needs to break strong resistance at around 1,360 for the rally to continue.

Nice breakouts in Singapore and Taiwan. India is on the cusp of a breakout. Korea, Hongkong, Philippines and Indonesia are testing resistances. Malaysia and Thailand are heading for previous highs.

Breakout on good volume gives a good chance of seeing a rally to 3,100 to 3,200.
http://www.asiachart.com/malaysiasing.html

http://www.asiachart.com/hkchina.html

http://www.asiachart.com/us.html

[brattzz]

no crash expected as it's ELECTION YEAR!!

US and MALAYSIA BOLEH!!

after election... hard to say... :O