Schaefers view is based largely on the extreme imbalance in the option market, one not seen since pre-1987.
Crosscurrents, who does not date the moment(not means not), but repeats it will come WITHOUT warning is based on their data revealing this is as great a one sided bet in market history.
They state that any ripple that causes bonds to start to fall will trigger a unwinding unlike any seen in history.
Crosscurrents says when everybody and their pet buys into the same article of absolute faith one can be sure it will at some point end catastrophically.
I will just boldface this statement to follow.
The massive one sided bet to bonds remaining strong for at least a decade is as dangerous a bet in the history of the U.S. market
Greenspan himself has been quietly but repeatedly saying for over a year that the ultra extreme complacency that bonds will remain strong is very dangerous simply based on the fact that NEVER does such complaceny prove true, that in all times past, the ending as been very bad.
So, what i am saying, anything but anything that disturbs this complacency will trigger an unwinding, that unwinding will sudden and very fast.
If you think all of history has changed and this time is different, you are joining a crowd the size of a continent.
What i am saying we have in place all the ingredients for a major crash BUT that is to say, we nonetheless can not say when, for true crashes are in their happening, shocking, stunning, dumbfounding, from out of no where.
We did not have this in 2000, why? because never did we have newspapers with a banner headline that fills the whole frontpage of some papers and the whole top 8 inches of the NYT.
MARKET CRASHES
But one thing in Market's favor is Bernanke's number one most intense area of study is the crash of 1929 and the great depression. And this has the greatest influence on his monetary theories, i gather.
But he is inherired a market with this huge one sided bet already in place.
We KNOW for a fact the Bernanke was quite opposed to the rapidity and extremes that the Fed reduced rates.
So the BUBBLES that Greenspan created by his ruthless chopping of rates was counter to Bernake's philosophy, but he has inherited the bubbles that resulted from Greenspan draconian rush to slash rates.
We will see what happens.
NYT today(XMAS, ho ho ho:), has a must read on the housing crash in Japan and its parallels to are situation now.Max
p.s. also, people, to not my surprise, have not been listening to Greenspans warnings, as he has been consistently giving them and they ignored.
What he said in speech in England should have alerted some people, but it did not. He said that he sees fiscal instabilities in the global financial markets that could have a very painful end if not addressed.
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