I quoted Bill Bonner earlier today – $36 Trillion worldwide up in smoke , including worldwide stock losses, write downs, and U.S. home values (not including world home values.)

Increases in total credit don’t come close to matching losses – hence, the likelihood of deflation.

That makes me think stocks are screwed either way, either because past earnings were unsustainable or because bonds (one day) will pay better yields and suck away capital. There is not much upside potential at these levels, in real terms. (Is this view legit?)

@ Steve: Thanks for spiking that one! I didn’t want the setup to go for naught.

Since you asked, the Fed puts out Total creditlink to the Federal Reserve Total Credit Market Debt Outstanding. next release is 12/11/08. Yes, it was still rising as of 6/30 and with annualized GDP at 14.3 trillion, Debt/GDP=357%.

I’ve been taking a close look at the 10 yr bond lately. That 10 yr reached very, very substantial levels today. If the rates go any lower, or the value of the bonds go higher, then it will be a technical breakout in my books. If we exceed today’s levels, we could see some major extremes….new lows on the yield..new highs on the notional value.

All the world’s bonds traders are probably short the 10 yr….which is probably why its going to truck on higher (yields lower).

- AT

Got any evidence of that? As in hard numerical data? Steve Barry claims that total credit is still rising.

No doubt that we ARE in a huge credit bubble:
http://www.comstockfunds.com/files/NLPP00000/292.pdf

And the claim is that, at least up until around this June — I have not seen any more recent posts from him on this — that the total credit is STILL INCREASING, both in relation to GDP (which is easy, with GDP caving in on itself) and in absolute terms. This is really scary, and I hope there is some sort of arithmetic “oops” in arriving at this conclusion. I’ve made a stab at independently corroborating the numbers in the comstock charts, and while I can’t match them to more than one significant figure (there’s a lotta ways to drift, like seasonally adjusted data), I CAN match them on an order of magnitude basis. And I’ve seen similar charts from Morgan Stanley.

Consider, for a moment, what it would mean if the credit bubble has not yet popped. I know of no other way that bubbles end, and if all this mayhem is simply due to a whacked-out housing market in a too-tightly wound global financial market, after a lengthy monetary-fueled expansion, then what will things be like when the largest credit bubble in the last several hundred years explodes?

I am not a survivalist, nor a “gold-is-money” loon (I see gold as simply a commodity with a history of being a convenient place to hide from inflation — diamonds prolly also work, or bulk supplies of any scarce metal (platinum, iridium, rhodium, etc) — but gold is a nice compromise between portability and liquid markets), but if this ginormous credit bubble bursts in my lifetime (and it could keep growing for a long time, so far as I know, most bubbles persist long after they should have realistically ended), then I know that fiat currencies will be toast and life as I know it will be over.

I surely do hope that you are correct in your assumption that our credit bubble dissipating, but it’s only a hope.

If you have any hard data that shows this to be true, please share it. But assuming that all these failed debt instruments means that the bubble has popped misses the point that the Fed has been working overtime to replace failed debt with new debt. Eventually (and prolly sooner rather than later) all that shiny new debt will be failing too. Then we’re really gonna see the excrement hit the rotating air mover.

This is no time for trading. As some know, I have held QID, adding along the way, since 5/07 without selling a share. I have avoided all whipsaws and now sit at all-time highs. My fundamental analysis and mega long term chart analysis both point to QID of 120. The chart is a perfect, rounded bottom, breakout at 78. This has already been tested a few times and looks good to go to 120 now. Around that point I am scaling out, as I will have achieved my long term goals.

As of today, my prediction made on TBP on 1/2/08, that this will be the worst calendar year in S&P history (-43% in 1931) is in the money…we are down 45% YTD. Barry, will you give me my own thread if I nail this one?

@wunsacon: I would have gotten away with it except for you meddling kids and your stupid dog.