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John Williams of Shadowstats.com Interview: The Next Crash Will Be A Lot Worse!

By HousingBoom   2013 Jan 28, 7:31am   1 link   41,741 views   177 comments   watch (1)   quote      


Anyone who thinks the U.S. is in recovery should stop listening to the mainstream media and listen to John Williams. He heads up Shadowstats.com, and is one of the few economists who crunches the numbers to give unvarnished true statistics. Adjusted for real inflation of about 7%, Williams says, "GDP has plunged, and we have been bottom bouncing" ever since the financial crisis started. Williams says, "The next crash will be a lot worse (than 2008) because it will push us into the early stages of hyperinflation." He predicts this will happen "by the end of 2014" at the latest....

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98   HousingBoom     2013 Jan 31, 7:04am  ↑ like   ↓ dislike   quote    

CDon says

Lets try this a different way. Assume its now the year 2063 - the fed is still printing like mad, and the stagnation continues, with no calamity having taken place - at what point in that 50 year time continuum will you have purchased?

This proves my point. Crack for brains think we can print trillions out of thin air for the next 50 years. lol. I'm done. you know what they say, never argue with an idiot, they'll bring you down to their level then beat you with experience.

99   Kevin     2013 Jan 31, 7:09am  ↑ like   ↓ dislike   quote    

I'm willing to bet anybody 5 ounces of gold that there will be no economic collapse in the next 2 years. 20 for 5.

"I don't understand economics so I'm scared by arbitrary statistics" is a weird way to live your life.

100   yup1     2013 Jan 31, 7:15am  ↑ like   ↓ dislike   quote    

HousingBoom says

Crack for brains think we can print trillions out of thin air for the next 50
years.

It is frustrating but Japan has been doing it for 20+ years..........

101   CDon   1/1 = 100% civil   2013 Jan 31, 7:15am  ↑ like   ↓ dislike   quote    

HousingBoom says

This proves my point. Crack for brains think we can print trillions out of thin
air for the next 50 years.

Out of curiosity, what have they have been doing for the last 200 years? If they have done it for 200, why can they not do it for another 50?

102   yup1     2013 Jan 31, 7:19am  ↑ like (2)   ↓ dislike   quote    

HousingBoom says

This proves my point. Crack for brains think we can print trillions out of
thin air for the next 50 years. lol. I'm done. you know what they say, never
argue with an idiot, they'll bring you down to their level then beat you with
experience.

You have basically lost faith in the system. Until a lot more people lose faith the system stays in place. If the system collapses, we all lose. If a bunch of people lose faith but the system does not collapse, those that lose faith LOSE. If the system stays intact Roberto and Iwog will most likely do very well. If the system fails we all LOSE. Based on that, it is probably a good bet that the system will not be allowed to fail.

103   HousingBoom     2013 Jan 31, 7:20am  ↑ like   ↓ dislike   quote    

yup1 says

HousingBoom says

This proves my point. Crack for brains think we can print trillions out of

thin air for the next 50 years. lol. I'm done. you know what they say, never

argue with an idiot, they'll bring you down to their level then beat you with

experience.

You have basically lost faith in the system. Until a lot more people lose faith the system stays in place. If the system collapses, we all lose. If a bunch of people lose faith but the system does not collapse, those that lose faith LOSE. If the system stays intact Roberto and Iwog will most likely do very well. If the system fails we all LOSE. Based on that, it is probably a good bet that the system will not be allowed to fail.

Yup, that's a possibility. The fact that central banks are trying to hoard as much gold as possible tells me that they are losing faith in the system. The system does not have to fail for home prices to fall another 20%+. That is all I am expecting at best.

104   HousingBoom     2013 Jan 31, 7:23am  ↑ like   ↓ dislike   quote    

yup1 says

HousingBoom says

Crack for brains think we can print trillions out of thin air for the next 50

years.

It is frustrating but Japan has been doing it for 20+ years..........

There is a good possibility that we will be like Japan but we can already see inflationary forces right now in food and other commodities.

105   tatupu70     2013 Jan 31, 7:24am  ↑ like   ↓ dislike   quote    

The Professor says

It does not look like the Federal Reserve (established December 23, 1913) helped with smoothing out the business cycle; quite the contrary. I also noticed that our economy booms with war.

Are you looking at the same chart as I am? Certainly, the Federal Reserve didn't instantaneously change things, but clearly the business cycle has been smoother after WWII. To what do you attribute that change?

106   yup1     2013 Jan 31, 7:28am  ↑ like   ↓ dislike   quote    

The Professor says

tatupu70 says



OK--Here is a chart showing US GDP since the early 1800s. You tell me--does it look like there were more boom/bust cycles before 1970 or after 1970?



It does not look like the Federal Reserve (established December 23, 1913) helped with smoothing out the business cycle; quite the contrary. I also noticed that our economy booms with war.

That is graphing business cycles it is not even showing the 2008 crash, HAHA

107   CDon   1/1 = 100% civil   2013 Jan 31, 7:35am  ↑ like   ↓ dislike   quote    

HousingBoom says

Yup, that's a possibility. The fact that central banks are trying to hoard as
much gold as possible tells me that they are losing faith in the system. The
system does not have to fail for home prices to fall another 20%+. That is all I
am expecting at best.

I fully expect you see your 20% - however, as has been the case for the last 3 years, I fully expect you see it in the form of nominal stagnation while inflation slowly works its magic and the remaining slack in the system is removed. You have very little upside risk in waiting IMO.

108   yup1     2013 Jan 31, 7:38am  ↑ like   ↓ dislike   quote    

The Professor says

If the crash happens those with property and precious metals will be ok, not
great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed.

If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing.

109   tatupu70     2013 Jan 31, 7:41am  ↑ like   ↓ dislike   quote    

yup1 says

That is graphing business cycles it is not even showing the 2008 crash, HAHA

Did you look at the x-axis? The chart is a little dated, I'll grant, but it clearly shows underwater was very, very wrong.

110   HousingBoom     2013 Jan 31, 7:42am  ↑ like   ↓ dislike   quote    

yup1 says

The Professor says

If the crash happens those with property and precious metals will be ok, not

great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed.

If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing.

It's going to be a crash but we don't know if it's a deflationary one (stock market collapse) or inflationary (bond market and/or dollar collapse). The job market is the biggest factor for home prices. All I know is that the job market will be in a world of hurt when this occurs. This will not be a soft landing like most bulls are predicting. The longer it doesn't happen, the bigger the bubble and the bigger the collapse will be

111   yup1     2013 Jan 31, 7:56am  ↑ like   ↓ dislike   quote    

tatupu70 says

HousingBoom says



Wages are falling so any price increase is not sustainable IMO


http://news.yahoo.com/personal-income-posts-biggest-gain-eight-years-133706758--business.html

That is from early dividend payouts for tax purposes. It will not continue.

112   tatupu70     2013 Jan 31, 7:58am  ↑ like   ↓ dislike   quote    

yup1 says

That is from early dividend payouts for tax purposes. It will not continue.

Maybe, maybe not. But to say that incomes are falling is not right.

113   HousingBoom     2013 Jan 31, 8:01am  ↑ like   ↓ dislike   quote    

tatupu70 says

Maybe, maybe not. But to say that incomes are falling is not right.

That payroll tax just killed any hopes of an increase in wages. lol

114   yup1     2013 Jan 31, 8:05am  ↑ like   ↓ dislike   quote    

tatupu70 says

Maybe, maybe not. But to say that incomes are falling is not right.

Sorry on that point you are incorrect.

http://beschloss.blogs.mydesert.com/2013/01/07/flat-per-capita-incomes-weigh-on-us-employment-sector/

115   yup1     2013 Jan 31, 8:09am  ↑ like   ↓ dislike   quote    

HousingBoom says

That payroll tax just killed any hopes of an increase in wages. lol

You got that right!

116   tatupu70     2013 Jan 31, 8:13am  ↑ like   ↓ dislike   quote    

yup1 says

Sorry on that point you are incorrect.

I didn't know your timeframe was a decade. I figured you were referring to present time

117   yup1     2013 Jan 31, 8:26am  ↑ like   ↓ dislike   quote    

robertoaribas says

54k down to 50K sounds about right for the crisis

I was only linking to show the income drop I did not read his crappy blog :D

118   yup1     2013 Jan 31, 8:29am  ↑ like   ↓ dislike   quote    

tatupu70 says

I didn't know your timeframe was a decade. I figured you were referring to
present time

Oh yes more long term, short term gains are too volatile. And that is the average which is dragged higher by the high end. A better statisic would be median incomes which are hopelessly low, 26k is the median single wage in the US, DOH!

119   CDon   1/1 = 100% civil   2013 Jan 31, 8:32am  ↑ like (1)   ↓ dislike   quote    

HousingBoom says

This will not be a soft landing like most bulls are predicting.

While written today - this could have just have easily been written 3 years ago.

For the last 3 years, despite you continuing to call for a "collapse", it has been the soft landing as each crisis turns into nothingburger after nothingburger. So again, is there any point in the next 0-50 where you decide to re-evaluate your conclusion? Is there any point in the next 0-50 years when you say, "gee, I guess there is not going to be a second collapse after all"?

And if not a date, how bout an event? If the DJIA hits say XYZ then you will change your tune. Or perhaps if unemployment hits ABC then you will reconsider...

BTW - if the answer for you is "I dont know" so be it. It just seems to me that anyone this "certain" of something, despite the some or even any evidence to the contrary, is setting themselves up for a lifetime of disappointment.

120   yup1     2013 Jan 31, 8:36am  ↑ like (1)   ↓ dislike   quote    

CDon says

For the last 3 years, despite you continuing to call for a "collapse", it has
been the soft landing as each crisis turns into nothingburger after
nothingburger. So again, is there any point in the next 0-50 where you decide to
re-evaluate your conclusion? Is there any point in the next 0-50 years when you
say, "gee, I guess there is not going to be a second collapse after all"?

I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?

121   HousingBoom     2013 Jan 31, 8:41am  ↑ like (1)   ↓ dislike   quote    

yup1 says

I guess I would ask why do you believe that 2008 cannot be repeated?

Because he's a mental midget!

122   Raw     2013 Jan 31, 8:53am  ↑ like   ↓ dislike (1)   quote    

yup1 says

I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?

Lots of reasons why 2008 can't be repeated anytime soon:
Home prices are not overpriced anymore. They are under priced.
Recent home purchases are not leveraged with zero downs. Many were all cash.
Interest rates are a lot lower.
Economy is not sinking anymore, but making a slow come back.
The worst is over, the future is bright.

123   yup1     2013 Jan 31, 9:00am  ↑ like (2)   ↓ dislike   quote    

Raw says

Recent home purchases are not leveraged with zero downs.

So 3% FHA loans do not happen?

124   yup1     2013 Jan 31, 9:03am  ↑ like (2)   ↓ dislike   quote    

Raw says

Home prices are not overpriced anymore.

So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

125   yup1     2013 Jan 31, 9:07am  ↑ like (2)   ↓ dislike   quote    

Raw says

Lots of reasons why 2008 can't be repeated anytime soon:

You saying it can't be repeated shows your ignorance. Lehman, Bear, Wachovia, WAMU, Countrywide, Merril, have been absorbed by the remaining big 5 banks. They are now much bigger than before the last crisis when Lehman ALONE destroyed the credit markets. You keep smoking that it can't happen again crack pipe.

126   tatupu70     2013 Jan 31, 9:08am  ↑ like   ↓ dislike   quote    

yup1 says

Raw says

Home prices are not overpriced anymore.

So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well.

127   yup1     2013 Jan 31, 9:14am  ↑ like   ↓ dislike   quote    

tatupu70 says

If rates rise, that means unemployment will certainly have fallen and incomes
will be up. So house prices will probably be rising as well.

The last housing bubble was caused by what? Artificially low payments with crazy subprime loans. Interest only, pick a pay, you name it. Rising rates do not lead to higher home prices.

128   CDon   1/1 = 100% civil   2013 Jan 31, 9:31am  ↑ like   ↓ dislike   quote    

yup1 says

CDon says




For the last 3 years, despite you continuing to call for a "collapse", it has
been the soft landing as each crisis turns into nothingburger after
nothingburger. So again, is there any point in the next 0-50 where you decide to
re-evaluate your conclusion? Is there any point in the next 0-50 years when you
say, "gee, I guess there is not going to be a second collapse after all"?



I guess I would ask why do you believe that 2008 cannot be repeated?

No absolutely, it can be repeated. I continue to look for risk pricing in the bond market, or in the a1/p2. As they both sit there, while we print with wild abandon, I dont think twice about it. If they start to rise, like we saw in 2007 - absolutely I will be changing my tune - and fast.


Yup1 says..."Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?"

Yes. Unequivocably. Again, I am operating on the assumption that they realize how serious this is - and if push comes to shove, they would much rather risk a global conflict with our creditors than they would see rioting, tanks in the streets, and the risk they could be dragged thru the streets, mogadishu style.

And therein lies the risk with changing course. There is so so so much debt out there - if called simultaneously, like we almost had in 2008, some very very very powerful players on the worlds stage will be very very screwed. And everyone knows this. Hence, no one is willing to pull the trigger - instead they wail, and shout, and then readily gobble down more of our debt.

So in that regard, honestly, there is no notational limit that we cannot exceed. Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift. The guy got it for $4USD on ebay. Mugabe would rather destroy his country's ability to be a member of the worlds stage than risk dying at the hands of his countrymen. When push comes to shove, I am pretty sure which way our PTB will decide too.

129   tatupu70     2013 Jan 31, 9:57am  ↑ like   ↓ dislike   quote    

yup1 says

Rising rates do not lead to higher home prices.

Of course not. It's not cause and effect. But rates also don't rise and fall randomly. They rise when there is an expectation of inflation and fall when there is an expectation of deflation.

So, if you are saying that rates are rising, that means there is an expectation of inflation, which implies higher incomes and lower unemployment.

130   yup1     2013 Jan 31, 10:00am  ↑ like   ↓ dislike   quote    

CDon says

Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift.
The guy got it for $4USD on ebay.

Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one for 4 bucks, ROFLMFAO!

131   yup1     2013 Jan 31, 10:07am  ↑ like   ↓ dislike   quote    

CDon says

Hence, no one is willing to pull the trigger - instead they wail, and shout,
and then readily gobble down more of our debt.


So in that regard, honestly, there is no notational limit that we cannot
exceed.

At some point mathematics takes over and the amounts of debt cannot even be serviced, then what? If you are just printing money to make fake reserves you are doing nothing. If that money does not get into the real economy the increased debts will eventually default. I guess you could go with a 0 interest rate, all of that money is fake anyway.

I guess that is the point, do we all not understand at this point that it is all fake. A large group of people being "poor" while an individual person is "rich" when ALL of the credit money ever created is fake is pretty rediculous.

If the population in general ever comes to truely understand the nature of credit money, no one will ever pay back another debt again, EVER!

132   yup1     2013 Jan 31, 10:09am  ↑ like   ↓ dislike   quote    

tatupu70 says

But rates also don't rise and fall randomly. They rise when there is an
expectation of inflation and fall when there is an expectation of deflation.

That is what they used to mean, I agree. If you think that is what rates mean in todays ZIRP environment I believe you are wrong.

133   yup1     2013 Jan 31, 10:30am  ↑ like   ↓ dislike   quote    

tatupu70 says

Of course not. It's not cause and effect. But rates also don't rise and fall
randomly. They rise when there is an expectation of inflation and fall when
there is an expectation of deflation.


So, if you are saying that rates are rising, that means there is an
expectation of inflation, which implies higher incomes and lower
unemployment.

Bill Gross from PIMCO said in 2010 that without Uncle Sam backing mortgages rates would climb by 3 to 4 %. I wonder what home prices would be with 7-9% mortgages?

134   Kevin     2013 Jan 31, 10:31am  ↑ like (1)   ↓ dislike   quote    

You guys understand that Zimbabwe was never a stable global superpower with reserve currency status right?

135   CDon   1/1 = 100% civil   2013 Jan 31, 10:39am  ↑ like   ↓ dislike   quote    

yup1 says

Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one
for 4 bucks, ROFLMFAO!

LOL - I stand corrected it was actually a 500 trillion note. Is yours the one with the 2010 redemption date?

yup1 says

I guess that is the point, do we all not understand at this point that it is all
fake.

Yeah , pretty much. If there was any doubt, the world realizes it is all a big ponzi scheme right now. But like all ponzis, once you recognze its a ponzi and all of you will lose, it behooves you to pawn it off on someone else - in this case the next generation (who will then have their own 2008 minute whereupon [unless someone calls their bluff] they will pawn that ponzi on to the next generation.

yup1 says

A large group of people being "poor" while an individual person is "rich" when
ALL of the credit money ever created is fake is pretty rediculous.

At the end of the day, money is just a representation of resources, (be them natural, political, or otherwise). In 2008, the worlds pool of bullshit was drained, and we were all exposed as swimming naked. Still, we, here in the US were still recognized as being the biggest, strongest, pack of grenades across its chest... So when we said "why dont we re-fill this pool, and lets all pretend it didnt happen" everyone else, recognized how powerless they were they nodded in agreement.

It wont always be this way. Eventually China or someone else will be big enough to call the shots. Im just not so sure that is going to happen while I happen to be on this planet.

136   CDon   1/1 = 100% civil   2013 Jan 31, 10:47am  ↑ like   ↓ dislike   quote    

yup1 says

Rising rates do not lead to higher home prices.

Real or nominal? In nominal terms, the record is not as clear as you think it is.

I dont have a graph for the US, but I do have tabular data, if you want to confirm it for the whole US. Either way, Im sure the people back in the 80s who decided to wait as interest rates hit 14-15-16 percent, watched in horror as nominal prices continued to slowly lurch upward.

137   HousingBoom     2013 Jan 31, 12:52pm  ↑ like (1)   ↓ dislike   quote    

underwaterman says

yup1 says

I wonder what home prices would be with 7-9% mortgages?

The market would collapse. Removing govt supporting 90% of all new mortgages underwriting or increasing interest rates or dumping shadow inventory at once will dramatically impact the housing market to the downside. We saw how quickly it dried up once the home buyer credit expired. It needs govt support to survive at all.

Yup! Watch the bond market. It's in the largest bubble in over 200 years and WILL burst because ALL economic bubbles bursts. The sheep won't know what hit them. Bonds have an inverse relationship with rates so you know what that means

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