First of all thank you for starting this thread, as it's a vitally important issue you bring up, as we are about to enter the next leg down IMO.
It's really this simple: World governments can not afford to bail-out the stock market to any great amount. They simply do not have the money. Hence why the bail out measures haven't worked. They put a band-aid on a heart attack patient.
Only private money/investors have the literally tens of trillions available to cause any great affect here globally. For this reason for the foreseeable future, there is only one direction that stock-markets are heading with deleveraging and the credit unwind of bubbles in everything from oil to Aussie dollar (I concede), to just about anything else you can think of, (stock prices!).
That's why I'm confident that just as bull market remained intact while it was on before everything went south starting with financials, now we are all going to have to continue to pay the piper until the $ half-Quadrillion ($500 trillion) of derivitives, on top of the rest of the trillions of unmitigated leverage is unwound.
There is still a lot of unwinding to be done. It's just that simple. I'm all the way with Professor Nouriel Roubini on this one. We're about to go down with a loaded round.
This is a little more thorough on the topic from the Telegraph in UK: ____________________________________________________ Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world’s 8,000 hedge funds would disappear "in a Darwinian process", either going bust or deciding meagre profits are not worth their efforts.
"This will go down in the history books as one of the greatest fiascos of banking in 100 years," said Mr Roman, who with Noam Gottesman, co-runs GLG, a former division of Lehman Brothers Holdings with assets of $24bn (£14.8bn). "There need to be some scapegoats, and the regulators are going to go hunt people. That will be good in the long run."
His views were echoed by Professor Nouriel Roubini, a former US Treasury and presidential adviser known for his accurate prediction of financial crises, who estimated that up to 500 hedge funds would fail within months.
Both men were speaking at the same hedge fund conference in London yesterday, and Prof Roubini said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week to halt descent into "sheer panic".
The economist warned that the world is heading for a protracted recession that will end the US’s financial dominance.
"It’s the beginning of the decline of the US financial empire. The Great Depression ended in a massive war. I hope that’s not going to happen
but it’s pretty ugly now," Prof Roubini said.
He added that turmoil over world trade, currency markets and debt is likely to cause geopolitical tensions between the Western world and emerging superpowers such as Russia, China and "a bunch of unstable oil states".
The conference saw analysts, economists and hedge fund managers discussing the possibility that global recession could now last two years on fears that government bail-outs and nationalisations have failed to stop the markets slumping.
"We’re now paying the price for the biggest asset and credit bubble in history," Prof Roubini said, advising investors to stay clear of risky assets and keep money in cash. "The bail-outs have not worked because the markets are no longer rallying, and the policy-makers have run out of options."
The global financial meltdown accelerated this month, with the UK and US governments being forced to take stakes in some of the world’s biggest banks. Stock markets around the world have fallen sharply this month as investors’ concern switches to the impact on the wider economy.
"It’s like we’re walking blind in a minefield," said Prof Roubini. "Every situation has become risky and no one can trust each other. The banks are too big to be allowed to fail, but they’re also too big to save."
Research from Hedge Fund Intelligence (HFI) shows that despite one of the worst months on record for credit funds, US hedge funds alone still have $1.7trillion (£1trillion) in assets. _____________________________________________
Remember this is from a guy who predicted this financial crisis so when he talks, you listen.
Anyone who is not already in cash is trying to get there, from oil to corn to stocks. The kicker is that they won't be back for some time. Unless of course they enjoy owning depreciating assets.
For this they might as well go out and buy a ridiculous investment like a Ferrari or two, as at least they'll feel good driving it while they burn their money.
(20min delay)