Comments on: In praise of bank runs, the only regulator we need

By: Pej

Pej — Wed, 26 Aug 2009 10:17:01 +0000

Thanks Mike!
I had also found this one, on the EWI web site (free registration required) http://www.elliottwave.com/tutorial/Default.aspx

By: Mike

Mike — Wed, 26 Aug 2009 10:12:05 +0000

If anyone out there wants a primer on Elliott Wave Theory, Daneric has an excellent series on his blog. For the record, get your E-wave analysis from him or EWI. I’m just a novice.

http://danericselliottwaves.blogspot.com/2009/03/elliott-wave-primer-part-1.html

By: Mike

Mike — Tue, 25 Aug 2009 18:55:13 +0000

Paper money would not be worthless if there were massive bank runs. Just the opposite: its value would soar, since so much in fake “deposits” (nothing really on deposit, just credits) would be wiped out. The money would continue to circulate as before, but each dollar would buy more. People would value pennies again.

But that is not the point of Graphite’s post. The point is that it is the moral hazard of FDIC in the first place that ENSURES massive systemic bank failure.

Without FDIC, stronger banks would attract cash from ones that made bad loans. This is what used to happen when the US was a high growth nation. The busts of the 19th century were essential to clear out malinvestments and free up capital for productive use.

By: TooOptimistic?

TooOptimistic? — Tue, 25 Aug 2009 14:35:57 +0000

Axclr8 wrote:
Regarding last post referencing Gold: I brought this up with regards to Graphite’s point of view on the FDIC. OK, So the FDIC goes bankrupt …. Paper Money is worthless … GOLD soars …. but heck, can you go to the grocery store with nuggets of Gold in your pocket? Ummm, nope. Then what do you do? There has to be some medium for transactions to occur …. what will it be?

Will one short-term alternative be some sort of bartering system — sort of like the Ithaca Hours system? See http://www.ithacahours.org/ and http://en.wikipedia.org/wiki/Ithaca_hours….What do you think?

By: GolfBoy

GolfBoy — Tue, 25 Aug 2009 12:43:13 +0000

I read the full article critical of EW principle. The author fails to grasp that EW was derived from *observation*, not from some explanatory theory. The rest of the article is full of straw men, as Graphite noted. In fact, the author unwittingly discloses that with respect to the equity markets, he is part of the herd!

By: Mike

Mike — Tue, 25 Aug 2009 09:14:14 +0000

Thanks Jason. I’ve also noticed the performance of the Yen in the early ’90s. In deflation, debt props up a currency despite printing, since the scale of the debt is so much greater than the scale of the printing. During panic phases the effect is strongest, since script is what you need to cover your debts.

By: jason bourne

jason bourne — Tue, 25 Aug 2009 08:39:23 +0000

A bit OOT, but you might want to take a look at this, Mike: http://safehaven.com/article-14282.htm

If you consider in 1991 Japan had not begun its QE regimes, while the US has started it by now, it is even more telling how strong USD can be. Hmm… P3 up in USD charts coming soon?!

If you look at now XJY lives to be 100+.

By: Graphite

Graphite — Mon, 24 Aug 2009 20:45:24 +0000

Axclr8 - those are all pretty pedestrian arguments against the Wave Principle, and ones that Prechter has dealt with at some length in his writings. No, Fibonacci relationships do not underlie “all” of nature, but they are found in numerous growth processes, of which human social mood (and its barometer, the stock market) is only one example. Furthermore, it is a description of mass human behavior, not that of any one particular individual. It is not a deterministic theory — individuals can (and do) resist the influence of social mood, else what would be the purpose of EW analysis or trading?

By: Axclr8

Axclr8 — Mon, 24 Aug 2009 15:15:39 +0000

Guys, here is interesting info debunking EW that might be food for thought or ridicule or both:

“The only real argument I’m hearing is that we are in wave count six so it must be over. But I don’t believe wave counts are real, because no one has ever been able to explain to me what causes them and why the market trades in an exact mathematical fibonacci sequence like these people claim it does.

This is more a religion than science. The presuppositions that lay behind wave counts is the claim that all of nature is based on fibonacci numbers. If that were true then it would mean that all of human history - and the future is predetermined by some math sequence. It would mean you have no free will, because your own behavior must match these numbers. Of course that is ludicrous. I know that the next time I eat, sleep, or go to the bathroom is not predetermined by a fibonacci sequence so I put zero stock in those theories and many of the people espousing them.”

http://www.wallstreetwindow.com/content/node/11442

By: RLS

RLS — Mon, 24 Aug 2009 12:58:20 +0000

agree with what you are saying but for now the S&P wants to move up and I do not see any resistance until 1200. Their are a large number of underinvested institutions that were looking for a retest of the low. I fully expect pullbacks along the way but ultimately see the 1200 level being hit