Once upon a time, the Sahara desert was lush rainforest.
Once upon a time, the earth was totally covered in ice.
Once upon a time Australia was part of Africa.

Once upon a time we had funny little old homeless guys walking around with placards that said ' we are doomed'  and 'the end is nigh'.

They all cleaned themselves up, joined political parties, discovered fast cars and hookers..and lived happily ever after.  

And that, my friends,  is the real truth.

ALL Ords lowest since July, 2009

At just after 11am, the ALL ords hit 3,973.90, which is the first time back below 4,000 since July, 2009.
http://www.google.com/finance?q=INDEXASX:XAO

The ALL Ords have since recovered somewhat, to be trading around 4,000, following a rise in DOW Futures.
http://www.forexpros.com/indices/us-30-futures-advanced-chart

That said, the Truth is, given the volatility of recent trading, anything is possible?

As I have said previously, I expect the ALL Ords, in line with other markets, will re-test their March, 2009, in the short term (prior to the end of 2012), which would see the All Ords at or under 3,111.

However, in the slightly longer term, I expect markets to re-trace their levels prior to the start of this current bubble, which could see the ALL Ords hit the low 2,000's or even something with a 1 handle at the start?

Ex Dame Pansi wrote on Oct 3^rd, 2011 at 1:41pm:


That would depend, largely on what happens on the DOW Futures, over the next hour of so!

Crazy world of Politics & Economics (in general), as well!

All Ords closed at 3960.


http://www.asx.com.au/asx/widget/chart.doasxCode=XAO&type=INDEX

    that was a big one day drop

OUCH!!!!

U.S. stocks rallied

, driving the Standard & Poor’s 500 Index up 4.1 percent in the final 50 minutes,

amid speculation European Union officials are examining how to recapitalize the region’s banks

. Treasuries fell and the euro rallied.

The S&P 500 surged 2.3 percent to 1,123.95 at 4 p.m. New York time, sparing the benchmark measure of U.S. equities its first bear market, or 20 percent retreat from a peak, since 2009. Yields on Treasury 10-year notes climbed 6 basis points to 1.82 percent. The euro appreciated 1.1 percent to $1.3322. Futures on Germany’s DAX Index pared their loss to 1 percent from 4.9 percent.

Equities rebounded after the S&P 500 fell below 1,090.89, the closing level required to give the index a 20 percent slump from the three-year high reached on April 29. Stocks rose after the Financial Times quoted Olli Rehn, European commissioner for economic affairs, as saying there is an “increasingly shared view” that the region needs a coordinated approach to halt the sovereign debt crisis. After U.S. markets closed, Belgian Prime Minister Yves Leterme said a “bad bank” to hold Dexia SA (DEXB)’s troubled assets will be set up.

“The European crisis has been the market driver,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “If Europe comes out with something to kick the can down the road, it buys them more time. We learned in 2008 how important the financial system is and how a ripple effect can occur.”

U.S. stocks followed European shares lower earlier as some officials signaled bondholders may have to take bigger losses on Greek debt than previously negotiated.

The possible breakup of Belgian bank Dexia and Deutsche Bank AG (DBK)’s abandonment of its profit forecast added to signs that contagion from the debt crisis is spreading. Goldman Sachs Group Inc. cut its global growth forecasts and predicted recessions in Germany and France.

Link -
http://www.bloomberg.com/news/2011-10-04/asia-stocks-oil-drop-on-europe-crisis-c...
=========================================
http://chart.finance.yahoo.com/zs=%5eDJI&t=1d&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU

Well, that was Fortuitous?

Just as the broader US S&P was about to close below 20% down from its April highs and enter into "official Bear Market" territory, out comes a rumour that Europes problems are about to have a magical fix and the DOW responds by rising some 360 points, in less than an hour, to provide some temporary breathing space!

This again reminds me of the adage, "buy on the rumour & sell on the fact" and the fact is that this is "market manipulation" by TPTB, to buy a little more time, in the hope that time will somehow solve all problems, which in this instance, it can't!

That said, at least the local (OZ) markets may get some respite today, with a rise, unless the can didn't get kicked far enough down the road, the facts surface too quickly and the DOW Futures dive again today?

We really are, now on the roller coaster ride of our lifetime!

Shrinking workforce may dampen expansion for decades

WASHINGTON —

Women and baby boomers entering the American workforce after 1950 helped to supercharge expansions in 1975 and 1983 by filling an increasing number of jobs and purchasing more goods and services. Now as the share of women with jobs falls and older Americans age into retirement, the shrinking — or, at best, slowly growing — workforce will weaken economic activity for the next two decades.

The demographic changes may be the biggest and least-appreciated reason why the two-year recovery has slowed, because the rate of growth for labor and capital is “the most important determinant” of economic expansion,

said James Paulsen, chief investment strategist for Wells Capital Management in Minneapolis.

More retirees mean slower household formation, reduced consumer spending and downward pressure on equity prices as retirement cuts people’s purchasing power, according to John Lonski, chief economist at Moody’s Capital Markets Group in New York, and Gus Faucher, director of macroeconomics at Moody’s Analytics Inc. in West Chester, Pa.

“A weaker labor force does dampen the pace of the rebound,” along with “our expectation for what an expansionary trend is,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “We should be lowering our sights on potential GDP compared to when our population was younger.”

Anemic gains in the number of new workers has effectively cut the long-term “speed limit for growth” to 2.25 percent, estimates Maki, a former senior economist at the Federal Reserve. That compares with the Fed’s estimated 2.5 percent to 2.8 percent rate for gross domestic product and average growth of 3.2 percent from 1980 to 2000.

Automakers General Motors, Ford and Toyota, motorcycle maker Harley-Davidson and natural- foods grocer Whole Foods Market may be hurt by the shift because most retirees will cut spending on big-ticket items and nonessentials, said C. Britt Beemer, chairman of America’s Research Group in Charleston, S.C., a consulting company that studies consumer behavior.

“Older people tend to have lower incomes, their consumption tends to be lower and in that sense, consumer-spending growth would be weaker as well,” said Moody’s Faucher. “There will be fewer people in prime car-buying years,” and “recreational goods and services are a young-adult thing.”

The aging population also may hold down stock values for the next two decades as boomers sell shares to finance retirement, according to a Federal Reserve Bank of San Francisco research paper released Aug. 22.

“The mentality has shifted to preserving wealth rather than growing wealth, with less-risky portfolio allocations,” said Emily Sanders, president of Sanders Financial Management Inc. in Norcross, Ga., whose largest group of clients is aged 55-65. A typical 65-year-old may have 50 percent of his portfolio in stocks, which would drop to 30 percent at age 80, she said.

Faucher forecasts changing demographics will lead to a period when nominal GDP growth — which includes the impact of inflation — slows to 3.3 percent compared with 5.5 percent before the 18-month recession. That means the rise in corporate profits and equity prices would slow to about 3.3 percent from 5.5 percent as well, he said.

An estimated 72 million people, or 19.3 percent of the population, will be 65 and older by 2030, compared with 40 million, or 13 percent, in 2010, the Census Bureau estimates.

“We are at the threshold of retirement mountain: a huge, huge change in the numbers of people who are reaching the age where they are leaving the labor force,” said Neal Soss, chief economist with Credit Suisse Holdings USA in New York.

While losses from declines in the value of 401k and similar accounts may force some to delay retirement, these delays will be temporary, he said.

“Maybe one of the solutions here is that they work a year or two longer,” he said. “Do we really think we are going to have a lot of 80-year-olds in the workforce? It sounds good until you start thinking about the practicalities of it.”

The baby boom, the population bulge born after World War II between 1946 and 1964, added 9.4 million people in the 16-24 age group during the 1960s and 7.3 million in the 1970s. The percentage of women in the workforce almost doubled to 60.3 percent in 2000 from 33.6 percent in 1953, according to the Labor Department.

Boomers started turning 65 this year, and every day for the next 18 years, about 10,000 more will hit the age that historically has been associated with retirement, according to the Pew Research Center in Washington. Women’s participation in the labor force may decline slightly during the next 40 years to about 57 percent because fewer will have jobs as they grow older, the Bureau of Labor Statistics projects.

While GDP has grown at an average annual pace of 2.4 percent in the eight quarters since the December 2007 recession ended, that compares with an average of 6.3 percent after the July 1981 slump and 4.7 percent following the November 1973 contraction, both of which lasted 16 months.

We need to add a new name to the ever increasing list of insolvent EU countries: the Kingdom of Belgium. Yesterday, it was reported that Belgium, in conjunction with the French government, would effectively nationalize and then break up the struggling mega bank Dexia (DXBGF.PK) and spin it off into the form of a good-bank/bad bank scenario (with taxpayers forced to pay the bill). This news is widely credited with sparking the 400-point move in the Dow in the last 45 minutes of trading.

The collapse of Dexia should not have taken anyone by surprise. In fact, the hopelessly irresponsible bank is no stranger to taxpayer funded bailouts. Back in 2008, during the depths of the US financial crisis, Dexia was injected with 6.4 billion EUR of capital by the French, Belgian, and Luxembourg governments. In addition, the bank was given up to 150 billion EUR in funding guarantees to assure reassure counterparties and to allow the bank to continue operations

One of the most troubling aspects of the Dexia saga is the incompetence of EU regulators and ratings agencies, which should spook any bank shareholder. Dexia notes proudly on its website that it passed last year's EU bank stress test, saying: “The conclusion of the stress tests is that Dexia does not require additional capital to withstand the CEBS two-year 'what-if' adverse scenario including the additional sovereign shock.” Most skeptics pointed out the flaws of the EU bank stress tests, mainly that they were too conservative and failed to prepare banks for an extreme case like a sovereign default.

It turns out that those critics were correct. While corruption and stupidity is to be expected among EU bureaucrats, one would think that investors could at least rely on ratings agencies for some factual information.

The major story of the Dexia bailout is that it now puts Belgium in the same position as EU bailout recipient Ireland, which was rendered bankrupt by the markets and frozen out of the credit markets in late 2010. Belgium at this time is unable to afford a major bank bailout for two major reasons: deteriorating economic finances and lack of political consensus. In 2010 Belgium GDP came in at $467 billion dollars, and debt to GDP rose to 97.2%.

As of June 30, 2010 foreign investors owned a whopping 88.7% of Belgium’s Treasury certificates and 55% of its Linear Bonds.

How investors will react to an over-leveraged country bailing out a bankrupt bank with total assets (517 billion EUR) that exceed the country’s GDP is not a pleasant thought.

Link -
http://seekingalpha.com/article/297975-belgium-joins-the-piigs?ifp=0&source=emai...
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A few observations -
1) Political corruption & incompetence is not restricted to Belgium Politicians.
2) Ratings agencies should be very closely examined, for their roles, in this entire Gloabl Economic Event.
3) Now that Belgium have joined the Piigs, how will things change if Germany fall into the trap?
Will we then have -
Big Pigs?

B

elgium

I

reland

G

reece

P

ortugal

I

taly

G

ermany

S

pain