RBS issues global stock and credit crash alert

[FRED]

Re: RBS issues global stock and credit crash alert

I was listening to NPR's Diane Rehm broadcast, and the point was made during 911, that often in a catastrophe the brain doesn't panic, instead it simply shuts down. Maybe it's like a computer getting too many commands at once, or better yet- not recognizing the input that is available.
What I appreciate about this forum is that a number of financial crises are presented as being possible, and several Itulipers have mentioned some strategies available to deal with it.
Its kind of like counting the number of rows to the exit, in an unfamiliar theatre, or noticing the exits on an airplane. Don't assume you won't survive the next financial crisis, just have a plan. Remember 56% of all airplane crash victims survive.

In point of fact, we have served this function for years. iTulip readers were not surprised by the tech bust, the 2001 - 2002 bear market, the post tech bust recession in 2001, the housing bubble (noted in Aug. 2002), the process of the collapse of the housing bubble, the credit crunch, the current recession, the inflation and rising prices of commodities and gold, and the current bear market.

Readers will also not be surprised by the political outcome of an inflationary recession in an election year with huge disparities in net worth, savings, and debt as antecedents.

Where are we? Here's a measure.

Since 1960, in every recession, average duration of unemployment always peaks at around 40 weeks about six months after the recession is officially over and about a year after the peak in the rate of change in inflation. (Note we are measuring changes in inflation versus inflation itself to avoid the BLS vs Shadowstats trap.)

Here we are at zero for the average duration of unemployment. What does this imply for inflation?

We think it implies that the Fed has extended the "boom" via credit growth and dollar depreciation and that inflation has a long way to go before unemployment rises far enough to slow the rate of inflation.

[c1ue]

Re: RBS issues global stock and credit crash alert

I've said it before, I say it again:

If you really think it will all break down due to a dollar collapse and/or government/system failure - it is best to be prepared early.

If history is a guide, those who moved their financial assets OUT of Argentina in 1999 and Russia in 1995 were the ones who came back later and prospered. Only those with unusual government connections were able to stay and prosper.

In the past with a gold peg, this was not a terribly good strategy since money was pretty much money. But today with fiat currencies, the only safety you can achieve is with relative economic value - i.e. those economies with the most growth and stability will retain the most value for their respective currencies.

Is it necessary to buy a farm in Costa Rica? I don't think so.

But having a nice pool of cash (not in dollars) which is accessible via ATM is a very fine backup. Similar to rich people in the past who kept their money in gold in vaults in one spot, but could call upon it anywhere in the world via an appropriate bank network.

Sure, ATMs could be stopped. But what would be the benefit to anyone to keep money from coming in?

[GRG55]

Re: RBS issues global stock and credit crash alert

I was listening to NPR's Diane Rehm broadcast, and the point was made during 911, that often in a catastrophe the brain doesn't panic, instead it simply shuts down. Maybe it's like a computer getting too many commands at once, or better yet- not recognizing the input that is available.
What I appreciate about this forum is that a number of financial crises are presented as being possible, and several Itulipers have mentioned some strategies available to deal with it.
Its kind of like counting the number of rows to the exit, in an unfamiliar theatre, or noticing the exits on an airplane. Don't assume you won't survive the next financial crisis, just have a plan. Remember 56% of all airplane crash victims survive.

And post-crash studies show conclusively that of those that do survive, the majority had thought through in advance what they would do. As you say, "have a plan".

[algerwetmore]

Re: RBS issues global stock and credit crash alert

I was listening to NPR's Diane Rehm broadcast, and the point was made during 911, that often in a catastrophe the brain doesn't panic, instead it simply shuts down. Maybe it's like a computer getting too many commands at once, or better yet- not recognizing the input that is available.
What I appreciate about this forum is that a number of financial crises are presented as being possible, and several Itulipers have mentioned some strategies available to deal with it.
Its kind of like counting the number of rows to the exit, in an unfamiliar theatre, or noticing the exits on an airplane. Don't assume you won't survive the next financial crisis, just have a plan. Remember 56% of all airplane crash victims survive.

[Starving Steve]

Re: RBS issues global stock and credit crash alert

Your friend should look into some mining plays to lever up...

On a net worth of under $700K U.S. in fiat-filth, I have about 38oz in gold, little piles of silver coin squirreled away, my log cabin in B.C, my I-bonds on deposit with the Federal Reserve Bank of SF, bank CDs all FDIC insured, a money market account at Vanguard in Pennsylvania, hopefully SIPIC insured as they claim, and my brokerage account in Victoria, BC, again hopefully SIPIC insured as they claim. So, if the fiat-filth becomes monopoly money, I would be in the food riots with the rest of you.;)

And I went against my broker's advice and re-bought into oil and gas income trusts early this week. Since pigs get slaughtered, this probably is the top.

I have two stox: GE which is going down the toilet and also Bank of Nova Scotia which is OK for now.

I bought GE at $33 a few weeks ago ( now worth $28) because GE builds atomic power plants and also GE makes drinkable water. But I have ZERO confidence or love for Imett who runs the company for a number of reasons: He has GE working on solar power; also he has GE selling mines to the Islamo-fascists in Iran. What a MORON and a traitor! (Had I known that GE was selling mines to the Iranians, I would never have bought into GE.)

I bought BNS because the old five chartered Canadian banks are arrogant and PIGGY. BNS paid the highest dividend, so I bought it. BNS is now worth $50, and I bought it a few weeks ago for $44.

When it comes to piggyness, nothing beats the Canadian banks. They charge customers--- CHARGE CUSTOMERS--- for withdrawals! And they have fees for everything. They pay ZERO interest on deposits. Oh yes! And the so-called liberal and progressive and enlightened Govn't of Canada lets them get away with this. Oh yes! The government keeps banking competition from the U.S. out. Oh yes!

As for gold mines, I own none of them. I did OK with Barrack and Gold Corp, but those companies should have made me rich--- AND THEY DID NOT. They were not worth the risk. And their dividends were A JOKE, and I mean A JOKE, like $3 per month on $30,000 vested.

My advice: Stay-away from gold mines. The best of the gold mines are bad investments, and the others are toilet money.

[Jim Nickerson]

Re: RBS issues global stock and credit crash alert

Thanks to you and Phirang. But let's say that my friend wants second opinions. So are any of you prepared to indicate (vaguely or precisely) their percentage portfolio allocations? I'm thinking especially of PMs/cash physical/electronic. (Tin foil hat on - boing!)

Broadly, inverse ETF'S 18.8% via DXD SDS QID TWM SRS SKF

AG COMMODITIES: 2.15% via DBA, RJA

Physical PM: 2.21% 24:1 gold:silver

PM's 14.95% via CEF, GTU, GLD, SLV, RJZ (2/3 BASE, 1/3 PRECIOUS)

FOREIGN CURRENCY: 17.29% via FXY, FXF, CNY, MEAFX

Hedged US Equity: 18.68% via HSGFX

Cash: USD 25.9%

Precisely at 11:32 Central Time 6/19/08

[krakknisse]

Re: RBS issues global stock and credit crash alert

If I had a friend, I would tell him he is responsible for his investments, and then I would share with him how I am allocated and why. I haven't always thought that way, but in my opinion it is probably the best answer.

Thanks to you and Phirang. But let's say that my friend wants second opinions. So are any of you prepared to indicate (vaguely or precisely) their percentage portfolio allocations? I'm thinking especially of PMs/cash physical/electronic. (Tin foil hat on - boing!)

[phirang]

Re: RBS issues global stock and credit crash alert

I know! But the devil is in the details. So what would you say if your best friend had the following allocation: 15% physical PMs, 45% electronic PMs, 35% bank fiat, 5% physical fiat. More physical PM? More physical fiat? I was asked by this question today by a friend. It is hard to give good advice, even if it is a theoretical portfolio. Please assist!

Your friend should look into some mining plays to lever up...

[Jim Nickerson]

Re: RBS issues global stock and credit crash alert

I know! But the devil is in the details. So what would you say if your best friend had the following allocation: 15% physical PMs, 45% electronic PMs, 35% bank fiat, 5% physical fiat. More physical PM? More physical fiat? I was asked by this question today by a friend. It is hard to give good advice, even if it is a theoretical portfolio. Please assist!

If I had a friend, I would tell him he is responsible for his investments, and then I would share with him how I am allocated and why. I haven't always thought that way, but in my opinion it is probably the best answer.

[krakknisse]

Re: RBS issues global stock and credit crash alert

Go back and look at what happened in mid-August last year to get a flavour of how these things manifest [total credit market seize up, everywhere]

You have to anticipate and take action in advance. Waiting is like trying to buy fire insurance after the roof has ignited...

I know! But the devil is in the details. So what would you say if your best friend had the following allocation: 15% physical PMs, 45% electronic PMs, 35% bank fiat, 5% physical fiat. More physical PM? More physical fiat? I was asked by this question today by a friend. It is hard to give good advice, even if it is a theoretical portfolio. Please assist!

[GRG55]

Re: RBS issues global stock and credit crash alert

You know... when (if)... okay... when this house of cards collapses, it will be rather quick won't it? Will we even have time to think?

Go back and look at what happened in mid-August last year to get a flavour of how these things manifest [total credit market seize up, everywhere]

You have to anticipate and take action in advance. Waiting is like trying to buy fire insurance after the roof has ignited...

[olivegreen]

Re: RBS issues global stock and credit crash alert

You know... when (if)... okay... when this house of cards collapses, it will be rather quick won't it? Will we even have time to think?

[olivegreen]

Re: RBS issues global stock and credit crash alert

"Central banks can create new money forever. However, they can't control where it goes and they cannot control its value." -- EJ

Also agree. Very quotable.

[bill]

Re: RBS issues global stock and credit crash alert

RBS was part of the “private meeting”,,, must be getting nervous.
http://www.telerate.com/article/news...43260720080615

N.Y. Fed's private OTC actions under fireSun Jun 15, 2008 6:10pm
WASHINGTON (Reuters) - The New York Federal Reserve's closed-door rule making with top players in the massive $60 trillion credit default swaps market came under legal fire on Sunday, as a fair finance activist filed a complaint
The meetings were held with more than a dozen companies led by investment bank Goldman Sachs Group Inc. The companies -- which account for the bulk of business in the $60 trillion market -- met to help set new rules for credit default swaps trading, including the establishment of a clearinghouse.
Among those present at the private meetings with the New York Fed were: Goldman Sachs, Merrill Lynch & Co Inc, Morgan Stanley, the Royal Bank of Scotland Group PLC, Societe Generale, UBS AG and Wachovia Corp, Bank of America Corp, JPMorgan Chase & Co and Citigroup, according to the New York Fed.
Also attending were representatives from the buy-side firms and hedge funds AllianceBernstein , BlueMountain Capital Management LLC and Citadel Investment Group LLC.

[olivegreen]

Re: RBS issues global stock and credit crash alert

"In other words, right out of the Jimmy Carter 1970’s stagflationary playbook, a little more inflation is always okay if it creates a little less unemployment.

This flawed thinking decimated the 1970’s economy and drove both inflation and unemployment sky high. Kohn not only undercut his own boss Bernanke, he also undermined efforts by President Bush and Treasury man Henry Paulson to restore confidence in the U.S. greenback at the G8 meeting about to begin.

Although Kohn was originally appointed to the Fed by President George W. Bush, one has to wonder if Kohn isn’t thinking about an Obama presidency, and perhaps even damaging today’s economy to make Republicans look worse and Obama’s pessimistic economic view look better."
... from Starving-Steve's link above...

----
All I wonder is: isn't there, in this world of power and money, anyone left with intelligence, honor and honesty who isn't so self-serving as to sell out so many people into a potential hellworld of inflation and poverty? If ever there was a time when people need good hands-free leadership... but its too late isn't it... if the truth be known... I guess I need to know when to go to the bank too... although here in Canada they insist we are in much better shape... decoupled as we are and all... not...

I believe the definition of this age will be "we didn't know who to believe so we didn't believe anyone..." If that makes sense....