Collapse Gives WAY TO A Rally

Labor Greens Unite!

Change climate with carbon price

Parasitic kids

Well that’s a good sign. Not twelve hours after we went to press with our latest newsletter – highlighting how September is historically the market’s worst month – and describing a Long Depression, stocks in New York rally by almost three percent. How is that good sign?

The Bear had everyone feeling pretty bearish about him. You can measure this in the number of put option buyers or in surveys. But this morning, we went to Google Trends to see how many people were searching for what you might describe as bearish topics like, say, economic collapse.

Click here to enlarge

You can see that thanks to the publication of two fairly high profile stories that went live late in August by Forbes and CNN, the conversation on collapse got a whole lot louder in the echo chamber that is the internet.

This more or less proves that if you wait on the mainstream press to validate your own thinking, you’ll always be late. It’s only safe for the papers to report on something once everyone’s thinking about it, and by then it’s too late to trade it.

But just to be safe, we asked our own in-house trading guru Murray Dawes what he thought. He wrote back that, “There is the possibility that the market has been ‘caught short’. By that I mean that traders could be overly bearish and short the market as a whole. The good GDP data could be squeezing them out of those positions and causing a short, sharp rally.”

“If this is the case,” he continued, “then you will see the market fall over again soon. If we see the ASX 200 close under the Point of Control of 4,400 in the next week or so then I would be confident that this current buying was a short squeeze and I would expect to see much lower prices in the near future. But until that occurs, this surprise rally should be respected.”

Murray’s article, by the way, was called, “Beware the false break out.” That term, “the false break out,” along with “the point of control” is key to his method of trading the markets. You can find out more by reading about Slipstream Trader.

Now we have to do something that’s required from time to time if you’re not familiar with our business model. We don’t like talking about our business model because you’d probably rather be reading about the stock market or the economy. So we’ll be quick about it!

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Finally, we see that the Greens and Labor have made a deal and that U.S. police have shot an armed man at the headquarters of the Discovery Channel in Maryland after he took people inside the building hostage. And we see that in some strange way, the events are not unrelated. Not causally, mind you, but philosophically.

Part of the big agreement yesterday announced by Labor and Green honchos was the set-up of a multi-party parliamentary committee to put a price on carbon. You can read about it here. But when you read about it, it’s clear that it’s a pretty undemocratic way of pretending to have a debate without having a debate. Typical, but pretty cynical. And as ever with the political class, it defers to the exalted power of “experts.”

Green’s Senator Christine Milne says that this very European process will, “Set up a parliamentary committee representing all the interests in the parliament committed to a certain idea and then enabling the appointment of experts to that committee. So the experts are not just to give evidence to the committee. The experts are part of the deliberations of that committee and that way you create the space in a parliament for people to talk through their own perspectives, nuance those perspectives and try to come up with a parliamentary consensus which has the support of everyone around the idea. “

Emphasis added is our own. But really, how much nuance can you have when everyone on the committee can only be on the committee if they are already committed to a certain idea? How hard is it to build consensus when you exclude everyone who might disagree from participating?

Milne continued: “You will note in the agreement the proviso for membership of the committee is that the people going onto it are committed to a carbon price. They may not all agree with the mechanism of achieving a carbon price but they all want to a carbon price and the idea is to invite everyone to it and the Coalition clearly if they were in opposition would be invited to join it on that proviso. So, it really is about grown up politics in Australia. It’s about ending the all or nothing, it’s about ending the accusations of back flips and sell outs and back downs and so on.”

In order to end the all or nothing false choice, it was necessary to create an all or nothing committee. Everyone who’s on it has to be all for a carbon price. No one who’s against a carbon price can be on it. That really is an effective way to end the argument. By not having it all and excluding other points of view.

Of course the justification for this is that the people against a carbon price are really whack jobs who don’t believe in global warming OR climate change. What’s more, they aren’t even experts. They’re just people, people who believe that common sense is more valuable than credentials. They’re just people. Very little people.

Milne says, “It’s a process we adopted in Tasmania to a very small degree when we achieved gay law reform by bringing in experts from the university, the justice department and so on to work with the parliamentarians. This I think can resolve this issue of a carbon price. It’s very important to us. We want one as soon as possible and we think this mechanism is the best way of delivering it.”

In other words, the best mechanism of delivering an outcome that the public hasn’t clearly endorsed is to use a non-democratic process that only includes people committed to the desired outcome. And that’s democratic how?

Honestly, we have to give credit where credit was due on this one. Julia Gillard had it right. Get a phone book from each city of 10,000 people or more in Australia. Pick ten people at random from each phone book. Put them on a Climate Change Committee. Put them in a three-star hotel outside the airport in Adelaide and give them six days to debate the issue and, if they decide, come up with a law.

What could be more democratic than that? If a random jury of your peers is good enough to deliver equal justice under law in the criminal justice system – where judges and juries must deal with complex evidence and experts – why is it not good enough to for public policy too?

In fact, the more we think about it, legislative conscription may be the best way to run the country after all. Each term, a new randomly selected group of conscripts is drafted to serve in Canberra. They are paid the minimum wage. You can be sure Parliament wouldn’t sit for long and that the government would generally stay out of most people’s lives and wallets, affording Australians the time and money to be good parents and neighbours.

Let’s have a vote! All in favour? All opposed?

But wait, what does this have to do with eco-terrorist James Lee’s bizarre actions and manifesto earlier today? Well, in point one of Lee’s manifesto, he seems to endorse Senator Milne’s committee of experts idea. We’ve reproduced the whole point here so we’re not selectively quoting, although the emphasis added is ours and not Lee’s:

The Discovery Channel and its affiliate channels MUST have daily television programs at prime time slots based on Daniel Quinn’s “My Ishmael” pages 207-212 where solutions to save the planet would be done in the same way as the Industrial Revolution was done, by people building on each other’s inventive ideas. Focus must be given on how people can live WITHOUT giving birth to more filthy human children since those new additions continue pollution and are pollution. A game show format contest would be in order. Perhaps also forums of leading scientists who understand and agree with the Malthus-Darwin science and the problem of human overpopulation. Do both. Do all until something WORKS and the natural world starts improving and human civilisation building STOPS and is reversed! MAKE IT INTERESTING SO PEOPLE WATCH AND APPLY SOLUTIONS!!!!

If poor Mr. Lee had just decided to run for office in Australia, he could be earning a public wage now instead of cooling in a morgue somewhere. He certainly has the right instincts to be in politics. He believes in coercion. He believes in State control of the media. He thinks “top down” solutions imposed from above should trump individual choices. He believes in expert scientists of a certain point of view. He’s against human civilisation and believes that children are filthy pollution.

Point four of his manifesto gets to the heart of his pro-planet, anti-human life message. He writes that, “Civilisation must be exposed for the filth it is. That, and all its disgusting religious-cultural roots and greed. Broadcast this message until the population of the planet is reversed and the human population goes down! This is your obligation. If you think it isn’t, then get the hell off the planet! Breathe Oil! It is the moral obligation of everyone living otherwise what good are they??”

Gee. That’s pretty much straight out of the tyrant’s modern political play book, isn’t it? Civilisation is filth? Check! Religion and culture and tradition are disgusting? Check! Human population should go down because it’s a pestilence? Check! Your obliged to agree? Check! If you disagree, go to hell? Check! If you disagree, you’re immoral? Check!

You get the feeling that some people just don’t like humanity. You get the feeling that some people view human life as a problem to be solved. That solution is vague, but usually involves somebody else dying without being killed. You get the feeling that deep down, some people view human beings as parasites on the planet. You get the feeling some people don’t feel very good about themselves but would like to take it out on the rest of us.

We also get the feeling that some people don’t view human life as the Ultimate Resource, as economist Julian Simon put it. Our view is that these people are themselves very selfish. They can’t imagine the world they live in coping with all the problems they perceive. So they want to destroy the world as it is and remake it into the world they want to live in, even if that world doesn’t include you and me.

It’s all very self-centred, moralistic, and unimaginative. And of course, Lee was plain crazy. He wrote, as this paragraph proves:

The world needs TV shows that DEVELOP solutions to the problems that humans are causing, not stupefy the people into destroying the world. Not encouraging them to breed more environmentally harmful humans. Saving the environment and the remaining species diversity of the planet is now your mindset. Nothing is more important than saving them. The Lions, Tigers, Giraffes, Elephants, Froggies, Turtles, Apes, Raccoons, Beetles, Ants, Sharks, Bears, and, of course, the Squirrels.

Of course the Squirrels!

TV will save us!

Save the froggies.

It would all be absurd and sad if there weren’t real live crazy people trying to run the government who didn’t’ share more or less the same anti-human, anti-civilisation worldview.

Dan Denning
for Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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23 Comments on "Collapse Gives WAY TO A Rally"

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So after Murray Dawes said the capitulation of stockmarket is upon us, the stock promptly ran up. And this is a good sign, apparently.
Because this could be due to short squeeze which happened because Bernanke promised to continue to stimulate US economy by buying up stocks?!?

But what does the price action say of predictive powers of Mr Dawes and his technique? Maybe nothing, but definitely not endorsing it.

Of course, Bernanke could have found some more creative ways of pissing the taxpayers money. His original idea with helicopter looked promising …


The only problem with your continuing malfeasance on CC/AGW is that commonsense doesn’t enable you to take a paleo-climatic or probabilistic view of things.

On the balance of probability, when viewed against the fact we only have one habitable planet, when considering the outcome if the sceptics are wrong, what are the dangers of doing nothing?


Benefits of doing something? Large. Sustainability.

You guys are NOT experts on climate. Get over it. This is going to happen, and despite your obvious bias, most people want this to happen.

On the climate you guys are absolute amateurs.

On finance, you are insightful nuggets of wisdom.

Farmer Charlie
Hi Tim, didn’t you notice that only about 10% of Australians voted green, and that after years of lies about dangerous climate change and the end of the world from the plethora of self interested extremist green groups. Only 10% of aussie voters are stupid enough to fall for the green propaganda campaign! That doesn’t give you or Bob Brown any reason to think that your whacko “new tax on air” will ever be made into law, but keep trying, eventually enough people will wake up to you guys that we might even get decent media coverage of the topic,… Read more »
Put it to a referendum: “Do you want the Government to introduce a policy to decrease carbon dioxide emissions?” Yes/No. It is almost certain that the answer would be “Yes” – this is consistently shown in polls, and has been the case for several years now. Then, ask people to choose between an emissions trading scheme, a carbon tax or regulation, and see what people want. The answer to this is less clear. Comparing elected political representatives to criminals is offensive. It also misrepresents the policies of the Greens. Yes, their views and policies are stronger than others, but they… Read more »
So those evil humans are causing an undesirable chemical reaction by breathing and therefore by the act of respiration allowing the carbon atoms to combine in such a way with the oxygen atoms in the air to form carbon dioxide. No doubt this in combination with burning fossil fuels will in some way cause an undesirable event like a rise in temperatures and in sea levels flooding once productive land and therefore reducing the number of humans breathing and burning fossil fuels. Problem solved! The fact that fossil fuels are so called should give every thinking person the clue that… Read more »

Not necessarily PC FC, but I tend to agree with you. There are Astrophysicists who think GW is rubbish, and these guys have street-cred, WORD.

Australia is in an incredibly strong position when it comes to climate change, let me give you the reasons why. Firstly we have over 40% of the World’s known uranium, most probably more. Secondly most of our electricity generation is fossil fuel powered. So putting one and one together, when we finally grow a pair and build some reactors we will effectively cut over 60% of our emissions or more. End of story then we can move on so until that day we will just fluff around with piddle power from wind/solar etc. Countries like China and India must look… Read more »
I will take some things back – according to the world nuclear org website, australia exports 8500 tonnes of Uranium metal a year. 22 tonnes of Uranium metal used in nuclear reactors has a net saving of 1,000,000 tonnes of CO2 per year. Australia’s total carbon emissions (for everything, coal/petrol/diesel etc) in 2007/2008 were 541 million tonnes of CO2. So the Uranium exports come to an equivalent of 2588 million tonnes of CO2 savings for someone else per year which is 4.8 times our national emissions. We are plonkers/snoozers/idiotas to continue have this “debate” and not be getting on with… Read more »
Ned S

Aside from the downside that I would have thought Australians are tired of voting about anything, I’d support a referendum if I got to choose the question. Mine might go something along the lines of “Do you want to pay even more for your electricity?” And let the sods suck on that answer.


One for the bears. Where is watcher7? This short run up in the past few days is on his side of the book. The transports have been on his side of the book too. I suppose I’m saying he was right that stimulus had the effect up until it turned around May but the bodgey balance sheets ground it down even when they just tried changing into neutral..


I said neutral didn’t I? I really meant they backed off the nitro out of the avgas that is juicing up the Caddie.

A drop in natural gas prices could be a good thing for my IMP shares.. A few smaller natural gas companies are in financial difficulties over there.. Imperial may be able to buy up at even more distressed prices :) Gold bugs are not buying into the rally I see.. Inflation/deflation debate is still open, we could still see a sustained (for a while anyway) rally on the DOW with the “temptation” of QEII dollars flowing soon, the crash down to 5000 I am still expecting, just wish I had the crystal ball to see which way first.. down then… Read more »

“Gold is still on for my $2400USD target.. this may prove to be conservative though ;)”

Maybe $6000, Shoes? ;)


Well we will put your call down for $6000 then Biker…

I will stick with $2400USD

I mean you have said $6000 here so that is your belief… ;) that’s how it works isn’t it? If you put a figure anywhere in your post, even in repect to someone elses post that then becomes your call too.. like some elses $5000 call somehow has become mine in your view? ;) So $6000USD it is for Biker, have pencilled it in good luck..


Come in, sucker:

“Comment by Stillgotshoeson on 27 February 2010: If the world does turn to hell in a basket and Gold hits $6000 I will probably be out of work, would have taken the caravan and a wagon full of baked beans and headed up to my fathers 110 acre block in western Victoria and stay there till the dust settles… ”

Go for it, Running Bear!~ :D


Is that a call on $6000 an ounce for Gold… no it is not ;)

It may be in your blinkers on world, but not mine or any other sane and rational persons :D

Comment by Stillgotshoeson on 3 September 2010: Well we will put your call down for $6000 then Biker… I will stick with $2400USD I mean you have said $6000 here so that is your belief… ;) that’s how it works isn’t it? If you put a figure anywhere in your post, even in repect to someone elses post that then becomes your call too.. like some elses $5000 call somehow has become mine in your view? ;) So $6000USD it is for Biker, have pencilled it in good luck.. Comment by Biker on 3 September 2010: Come in, sucker: “Comment… Read more »

Oh, I’m afraid you’ll hear from me, each time you make a(nother) silly prediction, son. (And you’ve made quite a few… . ;)

Alzheimers in your mid-forties? :D

Ned S

If gold gets to even USD 2,400 an ounce I imagine there’ll be a lot of happy Indian housewives. They’ll be able to flog off a few baubles and emmigrate to the US and pay cash for all that surplus housing the Americans don’t need. Could be a win/win? Detroit – The next New Delhi! :)

Sure Ned S, we could have a referendum on increasing electricity prices, but it would make more sense to have a referendum about the issue of climate change and then openly debate the available policy options and their likely effects. There is no point denying that an ETS or carbon tax would increase electricity prices – the whole point of such schemes is to add a cost for something which previously has not had a cost, and the price of many things will increase. There will then be an incentive – a market incentive – for people to adjust their… Read more »

Please remove the -Spam- video from the bottom of your mail outs.

We don’t need the extra Spam. A link would be fine, but auto-start video is forcing it on us.


You’re right, it’s all a great big lie from the Greens who a Secretly Great Big Agrarian Utopia-ists.

Much like that silly old line Copernicus was pushing.

Dear me.

Of course, it’s been raining and cold in Melb this winter, so as A. Bolt says, “No Such Thing”.

Ned S

CJ – You get the Chinese and Indians and Americans and Europeans on board and I’ll think about it a bit more. Until then we are just being bunnies for the mob. Although if it could be done reasonably cost effectively using nuke I’d think about that too. It’s where we will end up regardless I’d say.

If they keep putting elec up like they are talking about I’ll be doing lots of wood burning BBQs. Facts are facts I’m afraid. And if anyone can’t see that then their dispoable income is WAY higher than mine.

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