The Biggest Bubble of All: This One Has Yet to Deflate (Are You Ready?) - Elliott Wave International

Total Credit Market Debt % of U.S. GDP 1915-2011 (3Q) - Elliott Wave
Syndicated post by Elliott Wave International

The Biggest Bubble of All: This One Has Yet to Deflate (Are You Ready?)

More Threatening Than Any Single Economic Sector

April 20, 2012

By Elliott Wave International

History shows that once a financial bubble bursts, it can take a long time to bounce back.

Recent history offers an example: Real estate prices topped in 2006-2007 -- then came the worst part of the sub-prime mortgage crisis in 2008.

Yet instead of recovering with the passage of time, real estate prices just keep getting worse:

Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.

-- CNNMoney, March 27

Greek Town Develops Bartering System Without The Euro!

Bartering is making a comeback! Watch the BBC news clip after the jump (hat tip Zero Hedge).

Links For April 18, 2012

Natural Gas from 1999
 (DoubleLine Capital via BI)
  • DoubleLine Capital's conference call slides: "To QE3 or not to QE3, That is the Question" (Jeff Gundlach/Jeff Sherman, April 17, 2012) - Business Insider
  • Notes from Jeff Gundlach's conference call (says buy S&P 500 at single digit p/e ratio, likes natural gas) - Business Insider
  • Ray Dalio's Bridgewater Says Spain Is Worse Off Than It Was Before The LTRO - Business Insider
  • George Soros's Speech at Opening Session (INET Berlin) - Slides / Video 
  • George Soros: The Future of Europe 3/6 (INET Berlin) - Video
  • Is Mercantilism Doomed to Fail? China, Germany, and Japan and the Exhaustion of Debtor Countries (Joseph Stiglitz's speech at INET Berlin) - Slides / Video
  • The World in Balance Sheet Recession: What Post-2008 West Can Learn from Japan 1990-2005 (Richard Koo's speech at INET Berlin) - Slides / Video
  • "Not if, but when" for Spanish bailout, experts believe - Reuters

Best Buy is Closing 50 Big Box Stores In 2012, Here is Their Store Strategy (BBY)

After Blockbuster (update), Borders and Sears dumped square footage all over the retail commercial real estate market, now Best Buy is closing 50 big box stores in 2012. Here's the list of stores closing. Going forward, Best Buy plans to roll out more smaller stores ("Best Buy Mobile") and their new "Connected Store" format. I found the details in Best Buy's Q4/FY 2012 earnings release:

"U.S. Store Format Improvements
Best Buy's retail store strategy is to increase points of presence, while decreasing overall square footage, for increased flexibility in a multi-channel environment. The company intends to remodel key stores with a new Connected Store format in fiscal 2013, and to continue to build out the successful Best Buy Mobile small format stores throughout the U.S.

    Janet Tavakoli on Bank "Control Fraud", Credit Default Swaps, MF Global's Total Return Swap-to-Maturity Trade (and Missing Money)

    If you want to know everything that's going on in the illiquid, opaque world of OTC derivatives and bank/broker-dealer fraud, Janet Tavakoli, founder and president of Tavakoli Structured Finance, is the one to listen to. She was interviewed by Lauren Lyster on RT's Capital Account on 3/26/2012 and discussed the shadow banking system, how "control fraud" blew up the investment banks during the credit bubble, how Jon Corzine's $11.5 billion (gross notional value) "total return swap-to-maturity" trade on risky European sovereign debt bankrupted MF Global via margin calls and ended up misappropriating $1.6 billion of client funds, and how credit default swaps are essentially leveraged bets with little money down and big upside potential (example: John Paulson's ABX trade betting against subprime MBS). She also said derivatives are now dominated by speculators that are distorting markets (example: JPMorgan lost money on a coal derivatives bet in 2010).

    Understanding the Risk of Synthetic CDOs (By Federal Reserve Economist in 2004, Where Was Greenspan?)

    I found a research report that was written by Federal Reserve economist Michael S. Gibson in 2004 titled "Understanding the Risk of Synthetic CDOs". Did Alan Greenspan read this?

    img: FCIC/Wikipedia
    "The paper highlights key issues for investors in synthetic CDO tranches as well as for dealers who structure synthetic CDOs for clients. Investors in mezzanine CDO tranches are taking on leveraged exposures to the underlying credit risk of the reference portfolio. A tranche's credit rating does not convey all aspects of the tranche's risk. If investors disclose the notional amounts of their portfolio, broken down by credit rating, the leveraged nature of a mezzanine tranche's risk exposure would not be obvious.

    The paper also touches on some of the risks to dealers who structure and make markets in synthetic CDO tranches for clients. A complete set of synthetic CDO tranches may not be fully hedged by selling single-name credit default swap protection on the CDO's reference portfolio if the CDO tranches are structured as swaps whose payouts do not depend on the flow of income from the reference portfolio. Dealers in CDO tranches, including those who structure single-tranche CDOs, are exposed to model risk and, because of the dynamic hedging required, liquidity risk that are not present in traditional cash CDOs."

    Duolingo Lets You Learn a Language For Free Online

    Finally, an easy way to learn a new language. I'm going to try this out. Visit Duolingo's website here and watch the video below.