Has a Stock Market Melt-Up Begun for a Stock Market Crash in 2016?

Gathering around the stock ticker during the 1929 US stock market crash.

Melt-ups precede a major stock market crash, and by all appearances we may be in a melt-up right now that could cause a stock market crash in 2016. First, a small bit of euphoria kicked up permabull adrenaline in the US market when Brexit didn’t make the American sky fall overnight. At the same time, central banks scurried to buy stocks all over the world just to make sure markets didn’t crash. Then the world’s oldest banks began to topple in Europe, causing European money to flee into American stocks. (These banks had been falling a long time already, but now they started begging for bailouts.)

Then investors who shorted the market got scared to death because the stock market broke a nineteen-month ceiling, which had endured as if it were made of marble. So, the market shorters started to buy the stocks they had committed to now in order to close their positions quickly before the prices went up any higher. That created a massive short squeeze, which happens when a large number of investors who have shorted the market start buying the stocks they’ve committed to. That explodes demand, which drives stock prices up even faster, causing more investors to rapidly run for the exits of their short positions. In a short squeeze, investors accept huge losses in order to close out their bets before they lose even more money.

When Larry Fink, CEO of the world’s largest asset manager, announced Blackrock beat expectations for the second quarter, he summarized this week’s ceiling-breaking market as follows:

 

According to Fink, the recent rally has been supported by institutional investors covering shorts. “Since Brexit, we’ve seen ETF flows almost at record levels … $18 billion of inflows,” Fink said. What that tells you is retail investors are pulling out, he said. “You’re seeing institutions who were short going into Brexit … all now rushing in to recalibrate their portfolios.” Another curious fund flow: the ongoing rush into dividend plays. Fink said he’s been seeing huge inflows in fixed-income products. “So you’re seeing a risk-off trade, as we call it, around the world.” Fink also confirmed … that the true force behind the recent surge is a familiar one: central banks. Fink said extraordinary central bank asset purchases has been inflating stocks prices. (Zero Hedge)

 

That $18-billion dollar frenzy has the permabull speculators pawing the ground again and all the algorithms of the electro-speculators charged up and humming. Thus, the market perpetuates an all-out feeding frenzy. Very little of this flurry of buying is based on the economy. It is based on emotions causing actions, which cause more emotions that cause other actions. That’s why a “stock market melt-up” leads to the worst crashes in the history of the world.

 

What is a melt-up in stocks, and how could it cause a 2016 stock market crash?

 

A stock market melt-up always ends badly just like a Ponzi scheme. The market over-revs as everyone expects the other players to keep bidding the market up in scuffle to the top, until someone stops to take a breath, looks at the extraordinary height, says “Oh, my …” loses his grip in fear and falls. Suddenly other investors start doing the reverse of what they did before, making large panic moves to get out the way before the others fall. The pyramid that was balancing on its point all begins to crumble.

As Jim Quinn just wrote,

 

Lance Roberts, someone whose opinion I respect, reluctantly agrees we could see a market melt up:

“Wave 5, ‘market melt-ups’ are the last bastion of hope for the ‘always bullish.’ Unlike, the previous advances that were backed by improving earnings and economic growth, the final wave is pure emotion and speculation based on ‘hopes’ of a quick fundamental recovery to justify market overvaluations. Such environments have always had rather disastrous endings and this time, will likely be no different.”

…Short-term traders can make immediate profits using momentum techniques, following the herd, and picking up pennies in front of a steamroller. Remember your brother-in-law who was getting rich day trading stocks in 1999? Remember your cousin who was getting rich flipping houses in 2005? … There are always profits to be made for awhile. Then the bottom drops out, because fundamentals, cash flow, valuations, and reality matter in the long run.

 

This year I’ve read a number of analysts saying the stock market is not about to crash because the all-out euphoria that drives a market far above economic reality just before a major crash (the kind of crash that can wipe out 50-60% of the market’s total value) isn’t happening. Well, this may be it. We’ve had little bursts of euphoria, but this could be the Big One — the final roundup of the bulls. Central Banks with their know-all policies for crowding the market upward may have just herded the bulls all into the corral for slaughter.

 

Economic collapses and stock market crashes are not synonymous

 

When I predicted the economy would now go into the second leg of the Epocalypse, that doesn’t have to mean the US stock market will crash in 2016. My latest article on the developing Epocalypse did not predict another market plunge like we saw in January. (I count January as a crash of sorts in that it was the worst start of any year in the New York buy ambien with mastercard Stock Exchange’s history — so that’s a significant landmark at the start of a year of great economic decline around the world — but it was not followed by the pattern of stock market rallies and drops that I said I expected.)

Many people think of stock markets and the economies they are based in as synonymous because people are accustomed to gauging the economy by how the market is doing. So, when you say, “the economy is going to collapse,” they think stock market crash. So, just to be clear, that’s not what I’ve said will now happen.

Usually stock markets and their national economies do track together. However, most stock markets of late have not tracked their national economies for a long time, especially in the US. The US stock market has even run contrary to the US economy much of the time. It has tracked the Federal Reserve because speculators followed the money — the big money, the infinite money that can be created at will. But that only means the market has almost no economic support. It’s rising on hot air.

The Fed created money to be poured into the stock market (“front-running the market,” as Richard Fisher, one of the Fed’s board members said). If the economic news was bad, speculators drove the market up because a bad economy meant meant a shipload of new money from the Fed was on the way. The Wells Fargo wagon was coming!

The Epocalypse is an economic catastrophe that is unfolding in months that will get worse and worse. I noted in my last article about the Epocalypse that stocks were falling (particularly in Europe and particularly banking stocks) because crashing stock markets typically create economic catastrophe all by themselves, particularly if they focus on the banking industry as in 1929 and 2008 because then stocks and banks fail at the same time in a one-two, knock-out punch.

Even here, I’m not predicting a stock market crash for 2016. All the economies of the world are going down whether the US stock market crashes or not. In fact, I’m sure the US will be the last to fall. I’m pointing out that it appears the bulls may be making their final stampede at last. If the current market rally is an emotional melt-up — as it appears to me — then a massive US stock market crash in not far off because melt-ups are just emotional eruptions with almost nothing for support in the economy that should be the market’s foundation. Without support, the floor of the once-swelling caldera collapses into the receding magma chamber beneath.

In buying up stocks to “save us all from Brexit,” central banks may have unintentionally cued up the next big stock market crash by triggering a feeding frenzy. A person can make big money on the ramp up (as Lance Roberts and Quinn note), as many do, but it’s a dangerous gamble because you never know at what point investors will think too many jinga pieces have been removed and start to panic.

One reason I cannot predict a stock market crash for 2016 is that central banks can create infinite amounts of money. Now that fronting money for the market has practically become their standard play, who knows to what extent they will buy up the slack through their member banks, should investors start to flee, by creating fiat money in the reserve accounts of those banks (QE4)?

Janet Yellen certainly doesn’t want Trump to win the election now that he’s said job one is to fire her. Therefore, the Fed will pump any amount of steroids into the market by any vein it can find in order to keep Trump from proving right about a failing economy. They know that a falling market will be seen as proof of a failing economy by most people and that a falling market can create a failing economy. A fourth round of quantitative easing wouldn’t likely have an affect that would last long, but it could get enough lift for a couple of months to carry us through the election cycle. Federal Reserve board members are also now talking openly about “helicopter money.”

I’m not sure the Fed can save the market if it has already created a melt-up, but there is no way of knowing how much money the central banks will create or where they’ll invest it. Such a major unknowable can scuttle any prediction.

By Neuroxic (Own work) [CC BY 4.0 (http://creativecommons.org/licenses/by/4.0)], via Wikimedia CommonsWe do know from observation, though, that the more the Fed does to centrally manipulate the economy through the stock market and bond markets, the worse mess it makes of the economy overall. Honest price discovery, as David Stockman is always pointing out, has been blown to pieces for so long that no one knows what the real value of anything is because values throughout all markets have been carried aloft for years by the Fed’s hot-air of rapidly rising money supply. It’s a hot-air balloon ride into the unknown. The balloon is rising faster right now, but the flame that is lifting it may be its own burning fabric at the bottom, and that could become a melt-up of the whole balloon.

 


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22 Comments

  1. Ping from encre:

    great blog, keep up the good work.. greetings from Cyprus (the only country in the world that was invaded [1974 by the Turks, and now we only enjoy half of our country]), and has suffered a haircut (deposits over Euro 100,000 were confiscated by the government after EU’s orders).

    • Ping from Knave_Dave:

      Hi, Encre. Welcome to the blog. You’re also the first person I’ve heard from Cyprus; so I hope you will post comments from time to time as you see things where your own unique experience from Cyprus can add some perspective to the discussion. I’m thinking maybe the Cypriots and Greeks should break away with the Brits under a trade pact with each other that gives them back their individual sovereignty … and encourage a couple other European nations to do the same with them. While they’re at it, they should tell Europe they are unilaterally declaring bankruptcy on all debts owed by the government, end of story … and give the EU a haircut in exchange for the one they gave you. Of course, the EU would make sure you had hell to pay, so it’s not as easy as all that; but the alternative looks to me like, at least, a hundred years of indentured slavery to Germany and the other leaders of the EU pact.

      • Ping from encre:

        Hi Dave and thanks for the welcome!

        Yes, I wouldn’t mind expressing my views on some of the issues raised 

        In regards to leaving the EU, I’m not so sure it would be a good idea, since Turkey is less than 500km away from us and I’m sure Ertogan would at some point seize the opportunity to take us all and turn Cyprus into a Turkish island if we do not have anyone to back us up. So I guess we’ll stick with the EU as the dilemma is economic asphyxiation versus survival of the greek cypriot island even though we have suffered thousands of invasions throughout the centures and managed to keep our greek and christian element.. Ofcourse Russia is very sympathetic towards Cyprus and votes in our favor and against Turkey in all the major United Nation meetings (in contrast to the United states who are suppose to be our allies but always help Turkey..), but I doubt that Putin will start a war against Turkey just to protect us.. The same goes for Greece as the country is weak and could not stand a war with Turkey (it will try though).

        That’s the political analysis I guess.. Ofcourse I need to point out that all the signs in the past 10 years show that Ertogan (helping and dealing and trading with ISIS, involvement in Syria, the arogance, being a dictator etc.), will manage something we have all been praying for, which is to make Turkey explode into 3-4 pieces within a decade and each of the pieces will be a separate entity (Kurds, Armenians, Arabs, Turks etc.) Ertogan will of course be overthrown by his opponents (with the help of the usual suspects).

        From an economic angle, I have to admit that the haircut mostly damaged our reputation as a business centre because the big majority of people who lost their deposits over 100,000 was Russians . Cypriots lost money too and salaries went 30% down but 3 years later we are back where we were before the haircut. Small countries recover easier I guess when there’s determination. I wish we could act as Iceland though, where they threw all the bankers to jail and their economy stood on its own feet but they have resources and commerce. The only thing we have is tourism and the financial services sector.

        As far as Greece is concerned, they had a great opportunity last year with the referendum when more than 60% of the population voted “NO” to the EU proposal but Tsipras (PM), decided to turn the no into a yes and accepted a paranoid/disgusting/monstrous plan to save the country. A country that owed 120% of its GDP 5 years ago and IMF and EU turned it into 180% with their stupid and recessional measures..

        Whatever the case, all these may be irrelevant if you see the bigger picture where the 1% of the population have all the money and make all the decisions for the rest of us.. 

        • Ping from Knave_Dave:

          Oh, really good point! I hadn’t thought about the Turkish angle. Erdogan seems intent upon rebuilding the Ottoman empire with himself as emperor, of course. Just eliminated 50,000 people’s jobs who don’t agree with him and stuck a great many of them in jail … after his fake coup. As you mentioned, the Turks have tried to grab you in the past.

          Much respect to you for keeping Cyrus Cypriot all these years, surviving among bigger players.

          And, yes, Tsipras got the vote he wanted and then turned coat and wound up with a far worse deal than he originally rejected … and, yet, remained in power.

          –David

  2. Ping from TheEndGameIsNear:

    Excellent data, couldn’t have said it any better myself.

  3. Ping from malimut@msn.com:

    The entire nation is being run by liars and the economy is a total disaster as the last job report was exaggerated by three quarters.. Currently we are a banana republic.. last months job numbers were TWELVE THOUSAND , NOT 38 THOUSAND… 94 million Americans able to work on the sidelines….

    • Ping from Knave_Dave:

      Welcome to the blog, Mut.

      It seems like every month the government’s “adjustments” to the job numbers that come out are greater than the actual underlying new jobs. And … oddly … the adjustment is always toward the positive. One does have to wonder how it happens that all seasonal and other adjustments are upward.

      • Ping from TheEndGameIsNear:

        I got 4 new jobs last year and 2 this year. I quit both this year due to criminality within one firm and inability to relocate to another by any means.

        There’s your jobs creation. As a wannabe self employed business owner I cant say my last job was my last day job; it isnt. As an employee, I cannot abide another job in which I am expected to compete with people whose parents still fold their laundry. Yet that is all the new jobs created and every one of these jobs, the CEO was living in luxury and very well paid while employees, partners, and even directors putting in 60-80 hours a week were living 2/rented sublet room or in a car.

        Jail them and end it.

        • Ping from Knave_Dave:

          Fortunately, we’re finally starting to see people rebel agains that by voting for non-establishment candidates. Unfortunately, I think Trump is already swaying toward the establishment, and Bernie is out. I see Trump has picked a completely establishment Republican for his running mate and is taking economic advice from Larry Kudlow. So, I have very little hope he’s going to seriously change from Republican politics as it has been post-Reagan.

          Since Republicans have been the champions of let-the-crumbs-tickle-down-to-the-masses economics, and since Larry Kudlow has always been a major advocate of that kind of economics, it looks like Trump will just give us more of the same. (I think he knows American is broken, but I don’t think he knows how to fix it.)

          So, even under Trump, I expect we’ll get tax cuts for stock investors based on the tired and failed idea that they are the job creators. Now that he’s advocating war be declared on ISIS, we’ll get more military deficit spending to go with it, as we continue to fund something we cannot afford. So, we can expect to watch America continue to bury itself in debt, just as it has been doing for the past forty years.

          Then my concern becomes that those who are starting to rebel against the status quo will just give up. Hopefully, however, their anger will be a little smarter than that and will push Trump hard in the anti-establishment direction; but that’s hope, not expectation.

          –David

          • Ping from Creepy Pedro:

            Trump is most likely NWO anyways. Putting our hopes in mankind is usually a bad idea. God is needed in this country more than anything.

  4. Ping from Auldenemy:

    My own little prediction, made well over a year ago, was that the S&P500 would continue to rise as the underlying economy of the USA faltered. While no economy and its stock market rise and fall in compete tandem, the S&P500 bull market, which began far too fast after the worst global monetary crisis in history, was, and still is, a phantom created by the Fed. It was grown completely on QE, ZIRP and near zero interest rates, also massive Buybacks. Future monetary/economic historians will be writing PhDs on it, as in the complete insanity of pouring invented money into creating a stock market bull in favour of reforming a corrupt and bankrupt banking system and going all out to save the economic health of the nation. The UK did the same, the EU did the same, Japan has done more and more of the same, China is engaged in doing its own version of the same. All of these inter connected, ‘globalised’ monetary policies are akin to throwing petrol on a fire (the, ‘fire’ being unsustainable global debt levels).

    Creating vast amounts of new debt post the devastating 2008 debt implosion have achieved nothing other than to keep a select and tiny group of people obscenely rich. I think the Fed and other central banks have so lost touch with reality that even when the middle class are on food stamps, Yellen and Co. will be shouting, ‘The economy is fine, just look at the stock market highs!’.

    Really these central bank cretins (and I mean all of them around the globe), are suffering from a combination of three lethal qualities: egotism, pride and denial. Their ego is massive, feeding on their positions of power. In turn their pride is bloated which means they will not face any realities, thus they hide in the dark shadows of their denial. Do you notice we live in a world now where humility is all but extinct, no one can ever get anything wrong, most of all those who keep getting just about everything wrong, Banksterville and Politicians. We all get things wrong, we all make mistakes. Surely the true measure of integrity is to admit that? Of course there is zilch integrity in banking and politics, it is all about vanity, as in loving power and wealth. It always was like that which is why things like Glass-Steagall existed! Just as once upon a time, paper money had a restraint on it being over produced by the anchors of silver and gold, then gold, then nothing, so there used to be something called, ‘banking regulations’ (real ones, not the phoney, window dressing ones of this age). First the paper Ponzi scheme was let loose courtesy of Nixon taking away the gold anchor, next up Reagan and Thatcher had this wonderful idea to ramp up fractional reserve banking. That baton was merrily carried by subsequent Western leaders, with the duel – and lethal – mandate of growing economies on debt and out sourcing industries to Asia and the Far East (minimising pesky union demands for fair wages). It didn’t work, it came to a shuddering halt in 2008 and instead of admitting it, instead of central banks and politicians having the guts to face it and say, ‘We have to find a new way’, they just threw petrol (invented money), at the flames of a monetary and economic system that was no longer viable.

    This banking-political elite who, ‘lead’ us will go on with their madness until they have completely destroyed our economies and thus most of us with them. They lie about everything now, they corrupt all economic and employment data to feed their lies. They constantly manipulate stock markets around the globe. We live at the mercy of these people because none are ever held to account anymore. The worst that any suffer is a huge pay off, pension and lottery win speaking fees for the rest of their days. They are nothing short of maggots, infesting the now bloated corpse they and their previous banking-political incumbents created in the first place.

    Apologies for the rant!

    Multum In Parvo

    • Ping from Knave_Dave:

      An excellent synopsis of the road we’ve travelled.

      –David

    • Ping from steve jones:

      Goddamn, now when I read a brilliant new post by Sir Dave, I’m always looking forward to reading what Auld has to say!
      Dave, with these stupid new highs, I’ve been starting to doubt my own analysis. I was old fashioned enough to have flawed assumptions with regard to markets and economic health. Thanks for explaining the “melt up” phenomena, so beautifully…. after all, unlimited fiat can do anything in the medium term. Not wanting to be a predictable and boring gold bug (a relative newcomer) but surely PMs can eventually only go one way when this game ends.

      • Ping from Knave_Dave:

        Some things to consider: While the Fed has ended QE, it has not reduced its balance sheet or the money supply from the high volume of money put into the economy during all the QEs. So, the world is still drunk with dollars, most of which remain in stocks. While the Fed made a token raise in interest rates half a year ago, it has not been able to raise them again in over half a year because doing so would probably trigger another stock market crash in 2016 like we saw at the start of the year.

        My prediction last year was that they would be able to raise rates once and would do so in December and then would find themselves continually stuck after that where they would either not raise rates, or if they did raise rates because they couldn’t stand losing face, it would cause a stock market crash. As a result, even with QE ended, we continue to run on the most minuscule level of interest we’ve ever known. During all those decided before QE was invented, the current interest rates policy by the Fed would have been seen as the most extreme stimulus the Fed had ever given. So, we’re still running on a high level of stimulant.

        With so much hot air in the system, the market continues to find updrafts.

        Yet, the Fed is obviously running scared that, if they back off on the accelerator any at all, the market will die. Right now the stock market is the only game in town. So, if it dies, the Fed has failed on all fronts. The economy is doing poorly in terms of manufacturing, transportation, and retail sales. Housing is doing better, but it has topped out in price. Many US housing markets are now a little higher in price than they were at their peak in 2007 with less support from banks. (Inflows of massive Chinese investment have helped drive some markets up.)

        Meanwhile the oldest banks in the world are folding up like plastic wrap with a fire under it, and additional European nations are talking about splitting up. The US, however, is a beneficiary of Europe’s fall, as money is not evaporating from the system (yet); it’s running, so it has to go somewhere. As the whole world has begun to heave with some South American economies in violent collapse, Europe breaking up, the world’s most venerable banks begging for bailouts, Japan launching QE Quintillion, the surges in money flow are toward the US. Hence both stocks and bonds are getting pumped up.

        I don’t know how long or how that can carry us aloft when our own economy is doing mediocre at best; but the money certainly isn’t moving out of stocks into economic expansion (real-world investment in capital construction). It’s just hunkering down in the stock market and hiding. Likewise in bonds. These aren’t bonds for new construction. They’re just government debt. So, there is no wealth effect, other than on paper for those who are already wealthy.

        On top of the US looking like the only non-enflamed exit door for the entire world during a period of global conflagration, we have all that euphoria heating up the market, as talked about in this article. It’s hard to believe this kind of run-up ends anywhere but the biggest (but last) crash of all. You might be able to make a lot of money in a fired-up market like you see right now, but you’d be climbing a burning building. You can feel the heat on the other side of the wall, as you make the climb and watch the paint blister and smoke under your fingertips.

        • Ping from TheEndGameIsNear:

          You’ve noticed how each uptick occurs directly after an crash of sorts following political mayhem in another country (Brexit) or China and Germany going up to boom levels in flames and mushrooming clouds of waste mingled with decadence. Anyone who gets of on homeless people working like slaves in red carpeted luxury for the contrast of it all is as screwed as Hitler’s generals in WW2. Now isn’t the time to dish out on a new Mazzeratti, gush on speculative overvalued real estate, or have a litter of kids. But it doesn’t stop those in the business who do not bother to pay me a living wage for a respective area accounting position from gorging and alienating the name noobs I have to somehow motivate to join the industry, much less stay.

          We are bleeding money and resources in respect to billionaire profits. Our finances are akin to being drawn, quartered, and stretched — and cracks and fissures always lead to break no matter how much snake oil is applied by Yellen or Merkel and Cameron.

          This is a global conflict that the US started stemming from the catastrophic crash of 2008.

          My fear is that the investors who bailed us out are going to the cage fight with the big guys from IRS, SEC, BOE, FTB, and BR court orders.
          Acquisitions Dept’s care not whether whole corporate apartment franchises will evict millionsas their global counterparts have already become insolvent.

          Make no mistake, the people who orchestrated the bailout are about to get financially gutted in the public eye causing the corporate crash.

          WW3 is within sight if nothing is don’t and the banksters cannot pay us to mind their lavish buildings for want of a place to rent, never mind physical security.

          Housing AFFORDability scarcity in WW2 was so precious that only government agents or vital war workers could rent at prices controlled by government via quartering.

          If the portfolio investors who rigged this is thing they are going to extort people who failed to prevent the war who are now stuck fighting it and profit, I’d love to invite them into a nice little event known as stark unvarnished reality replacing entertainment.

          • Ping from Knave_Dave:

            Won’t it be interesting if the first big kaboom in Europe happens in Germany with Deutsche Bank melting down. After all the talk of German discipline and all efforts by Germany to control Europe, and Germany’s putting the screws to Greeks, wouldn’t it be interesting if the first massive failure that blows Europe apart happens with a German bank? (It’s looking pretty close to that right now.) Even more funny is that the big bank full of banksters is now BEGGING for bailouts — the very thing the Germans refused to give the Greeks any more than they absolutely HAD to. So, now we’ll get to see if the bailout blues changes tune when Germans start singing them. Will Merkel and Schauble fade in their resistance to bailouts or show they really believe in their disciplined ways and stay the course?

            Just one point of difference: this is a global conflict that started with Reagan’s (and I voted for him) supply-side economics, which George Bush, Sr., originally rightly labelled “voodoo economics” until Reagan gave him a shot at the presidency by making him V.P. By focusing tax breaks on the supply side, you automatically focus them on the wealthy. Of course, they stimulate the economy by putting more money back into the economy. HOWEVER, they do not stimulate it as much as tax breaks on the demand side (consumer side). Those tax breaks get spent on diapers and new clothes and downpayments on new homes, furniture, etc. — all of which creates a big increase in demand for the things the rich Suppliers make.

            So, guess what? It’s always guaranteed that ALL of the money bubbles up from the poor to the rich; BUT it is never guaranteed that any of the money trickles down from the rich to the poor. The rich have many filters to keep the money at the top, and they didn’t spend much of it creating new factories to build things that there was no demand for. They spent it bidding up stocks and bidding up the price of football teams and of football players and raising the wages of champion CEOs. The money kept eddying around the toes of the rich, and very little of it trickled down.

            Yet, there are still a lot of blue-collar Republicans who continue to believe religiously in the Supply-side phantom.

            –David

        • Ping from steve jones:

          We all love you analogies Dave! They
          i) bring an abstract concept to life
          ii) borrow powerful emotions from another context
          iii) lighten the tone with humour
          iv) boost comprehension
          v) shift perspective, and
          vi) blast away boredom.
          There, I know the theory of good writing, (blogging) I just wish I could do it as well as you (and Auld). 😉

          • Ping from Knave_Dave:

            I love the way you pulled all that together, Steve, and I hope that is what some of this work does. Thank you for a chemical engineer’s perspective, too. I am thinking the cracking tower has to be close to melting … or busting a seam.

        • Ping from steve jones:

          How this for an analogy? The “melt up” is like when a liquid is being distilled. So long as there is some liquid in the system, vapour continues to go up the column. When all the liquid is gone, and heat continues to be applied, catastrophic failure is inevitable. (I’m a chemical engineer).

  5. Ping from craig:

    Very insightful analysis, David, and seems spot on to me. Thanks.

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