Comments on: The Global Bubble: Liquidity Bubbles Are About to Pop All Over Asia & Europe http://www.dailyreckoning.com.au/global-bubble-2/2007/02/26/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 17:27:32 -0600 http://wordpress.org/?v=2.8 hourly 1 By: John J. Xenakis http://www.dailyreckoning.com.au/global-bubble-2/2007/02/26/comment-page-1/#comment-1744 John J. Xenakis Mon, 26 Feb 2007 14:31:57 +0000 http://www.dailyreckoning.com.au/global-bubble-2/2007/02/26/#comment-1744 To Allen Jacobsen and others: It has been possible, for several years, to prove that a major 1930s style Great Depression is coming, simply by noting that the stock market is overpriced by a factor of over 200%. Price/earnings ratios have now averaged 20 or more since 1995, and this alone shows that a crash is coming, since P/E ratios always fall close to 5 every decade or two, the last time in 1982. Today, you can look at various variables -- public debt, trade balances, hedge fund market -- and note that these variables have been growing exponentially, with no sign of leveling off and falling, and no willingness in Central Banks to force them to level off and fall. You can show mathematically that this situation cannot continue. So it's easy to prove that we're close to a major financial crisis, but it's impossible to know exactly when. When it happens, it will be triggered by a generational panic, the first since 1929. It will be a massive loss of confidence throughout the country and the world, total destruction of self-confidence, replaced by a corrosively growing fear, leading to panic, massive homelessness and bankruptcies. We're actually overdue for that, just as we're overdue for a flu pandemic. When that happens, you'll know it. When will that panic begin? Maybe now, given the panic on the fringes -- the ABX index. But it can't be predicted. It may happen tomorrow tomorrow, next week or next year, but in view of the massive and growing imbalances in global finance, probably sooner rather than later. Sincerely, John John J. Xenakis E-mail: john@GenerationalDynamics.com Web site: http://www.GenerationalDynamics.com To Allen Jacobsen and others:

It has been possible, for several years, to prove that a major 1930s style Great Depression is coming, simply by noting that the stock market is overpriced by a factor of over 200%. Price/earnings ratios have now averaged 20 or more since 1995, and this alone shows that a crash is coming, since P/E ratios always fall close to 5 every decade or two, the last time in 1982.

Today, you can look at various variables -- public debt, trade balances, hedge fund market -- and note that these variables have been growing exponentially, with no sign of leveling off and falling, and no willingness in Central Banks to force them to level off and fall. You can show mathematically that this situation cannot continue.

So it's easy to prove that we're close to a major financial crisis, but it's impossible to know exactly when. When it happens, it will be triggered by a generational panic, the first since 1929. It will be a massive loss of confidence throughout the country and the world, total destruction of self-confidence, replaced by a corrosively growing fear, leading to panic, massive homelessness and bankruptcies. We're actually overdue for that, just as we're overdue for a flu pandemic. When that happens, you'll know it.

When will that panic begin? Maybe now, given the panic on the fringes -- the ABX index. But it can't be predicted. It may happen tomorrow tomorrow, next week or next year, but in view of the massive and growing imbalances in global finance, probably sooner rather than later.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

]]> By: allen jacobsen http://www.dailyreckoning.com.au/global-bubble-2/2007/02/26/comment-page-1/#comment-1743 allen jacobsen Mon, 26 Feb 2007 05:58:01 +0000 http://www.dailyreckoning.com.au/global-bubble-2/2007/02/26/#comment-1743 Dear Bill Bonner, For the lst 18 months I've been reading and hearing from gurus like youself how the liquidity , real estate ,commodity and equity bubbles are going to burst --- but they never <strong>[expletive removed by editors.. but it started with an F]</strong> well seem to ! They go on and on to higher and higher levels . I'm coming to the conclusions that you bunch of wankers dont know anymore than the Pricks that create the bubbles. happy Pot smoking , Allen J. Dear Bill Bonner,

For the lst 18 months I've been reading and hearing from gurus like youself how the liquidity , real estate ,commodity and equity bubbles are going to burst --- but they never [expletive removed by editors.. but it started with an F] well seem to ! They go on and on to higher and higher levels . I'm coming to the conclusions that you bunch of wankers dont know anymore than the Pricks that create the bubbles.

happy Pot smoking ,
Allen J.

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