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It Has Started: Wall Street Is Preparing For A Doomsday Scenario
TBI ^ | 7-21-2011 | ya Wachtel

Posted on 07/21/2011 7:26:09 AM PDT by blam

It Has Started: Wall Street Is Preparing For A Doomsday Scenario

Katya Wachtel
Jul. 21, 2011, 9:15 AM

If you're simply looking at their public statements, Wall Streeters seem to be alarmed about the debt crisis, but don't appear to be sliding into panic mode.

In fact, they're just really good actors.

Across the financial sector, many are preparing for a debt doomsday scenario, in which the U.S does in fact default, the New York Times reports.

Firms are "taking steps to reduce the risk of holding Treasury bonds or angling for ways to make profits from any possible upheaval."

It's clear hedge funds have changed gears and many are in heavy de-risking mode, with billion dollar firms like Moore Capital and Soros Fund Management moving their flagships into majority cash.

This was a tactic implemented by a ton of hedge funds when the financial world imploded in 2008 -- so it's a very big statement on how bad they think things may get.

While "hedge funds are stockpiling cash so they can buy up US debt if other investors flee," banks are looking hard at their treasury holdings and mutual funds "are working on presentations to persuade their boards that they can hold the bonds even if the government debt is downgraded," the NYT reported.

And certainly,

One of the worst possibilities that people in the financial industry... have been discussing is that scores of insurance companies, pension funds and mutual funds might be forced to dump their Treasury holdings.

But the problem with trying to prepare for default in a meaningful and specific way is best summed up by the CFO of Wells Fargo (which is stockpiling cash just in the case): "Because nobody knows what is going to happen, nobody knows how to prepare."

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: 2ndgreatdepression; beprepared; bhoeconomy; buygold; buysilver; cw2; cwii; debt; debtdefault; default; democrats; economy; getreadyhereitcomes; greatestdepression; greatrecession; obama; obamadepression; obamanomics; obamasdepression; perpping; preparedness; preparenow; preppers; prepping; survival; survivalism; survivalping; treasuries; urbansurvival

1 posted on 07/21/2011 7:26:17 AM PDT by blam
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To: blam

On the bright side, the NYT and Goldman Sachs may go broke. Wishful thinking, I know....


2 posted on 07/21/2011 7:28:13 AM PDT by kittymyrib
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To: Kartographer
Fed Preparing For US Default Says Plosser
3 posted on 07/21/2011 7:29:43 AM PDT by blam
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To: blam

If it’s inevitable, just bring it on and get it over with.


4 posted on 07/21/2011 7:30:50 AM PDT by ZX12R
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To: blam

Today, the market is preparing for doom with a pretty good opening hour rally (Dow up 210, S&P up almost 16). Flight to stocks?


5 posted on 07/21/2011 7:32:12 AM PDT by Pearls Before Swine
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To: kittymyrib

Women and Minorities hurt most.


6 posted on 07/21/2011 7:32:51 AM PDT by mick (Central Banker Capitalism is NOT Free Enterprise)
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To: blam

If treasuries were sold off for pennies on the dollar due to a rating change (which I doubt will happen as the rating agencies are brought-and-paid-for poodles of the Treasury) then the dollar would massively devalue.

And 70% of USD are held as foreign assets.

So it’s not a good idea to ‘de-risk’ by holding fiat of any kind - including the CHF. It’s all colored paper.

Sensible funds would buy hard assets and precious metals.


7 posted on 07/21/2011 7:34:46 AM PDT by agere_contra ("Debt is the foundation of destruction" : Sarah Palin.)
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To: blam

And the dow is getting very close to 13,000??? Go figure.

It must be a suckers market? But then again, that is what I thought back when the dow was at 10,000.


8 posted on 07/21/2011 7:34:59 AM PDT by BobinIL
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To: blam
Any "default" would likely only be a technical default, namely a delay in the timeliness of payments (a few months at most), but not an actual loss in payments themselves. In a rational market, this would mean Treasuries would only lose at most a few percentage points. But since there is no such thing as a rational market, there would indeed be a huge sell-off. Combined with the over-leveraged Manhattan banking system, it might be unpleasant, but I doubt it would be worse than 2008.

Hedge funds, proprietary trading firms, and other nimble players would swoop in to buy the overly-cheap Treasuries. These players' risk management practices are far better than those of the large banks, which admittedly isn't saying much at all.

Mutual funds would sell off into the down market, destroying client capital and once again showing us what an utter scam the mutual fund industry is.

Upside: US government wouldn't be able to do any bailouts.

9 posted on 07/21/2011 7:36:06 AM PDT by Thane_Banquo
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To: blam

up 130 points this morning.


10 posted on 07/21/2011 7:36:23 AM PDT by Perdogg (0bama got 0sama?? Really, was 0sama on the golf course?)
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To: blam
Here's What "Selective Default" Actually Means

This morning, reports emerged from Europe that "selective default" was on the table for Greece.

A sovereign nation enters "selective default" when it elects to delay repayment of some of its financial obligations while fully honoring others.

11 posted on 07/21/2011 7:39:29 AM PDT by blam
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To: blam

This crap shoot called the market is just that. It is just kids playing roulette and when crap hits the fan the market will crash with America.


12 posted on 07/21/2011 7:39:29 AM PDT by Logical me
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To: BobinIL

+136 as I post.

13 posted on 07/21/2011 7:41:48 AM PDT by blam
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To: Perdogg

Any default would be a huge “win” for Omoslem.

Communist moslems trying to sink the USA used to be called “traitors.”


14 posted on 07/21/2011 7:42:24 AM PDT by LyinLibs (All moslems are somewhere on the killing-you spectrum)
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To: blam

We are not going to default. This is just more pimping for their boy Obama. It will continue until or unless he determines there are more votes to be had by throwing them under the bus than by taking their money.


15 posted on 07/21/2011 7:44:47 AM PDT by Buckeye McFrog
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To: blam

DJI 12,728.95 Up +157.04 +1.25% Really?.............

16 posted on 07/21/2011 7:46:27 AM PDT by Red Badger (PEAS in our time? Obama cries PEAS! PEAS! when there is no PEAS!..........................)
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To: blam
Phew! July Philly Fed BEATS Expectations At 3.2
17 posted on 07/21/2011 7:47:52 AM PDT by blam
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To: Pearls Before Swine
"Flight to stocks?

Makes sense to me, stocks are a hard asset. A dollar down grade would prompt a dollar devaluation so hard assets would be a good thing to have to ride out the storm. Not seeing much movement in gold, I would expect gold to be up too. Maybe the smart people think 1600 is too much for gold and stocks are a better deal.

18 posted on 07/21/2011 7:54:05 AM PDT by jpsb
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To: blam

“Because nobody knows what is going to happen, nobody knows how to prepare.”

Food, water, ammo, fuel, batteries, TP, bag silver, etc. These boys need to check out prepper sites.

Cash and bonds? Rolled up and dipped into paraffin for use as fire starters, maybe. Weren’t these guys ever in the Scouts?


19 posted on 07/21/2011 8:01:35 AM PDT by dagogo redux (A whiff of primitive spirits in the air, harbingers of an impending descent into the feral.)
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To: blam

They have to keep the Dow up or they’ll lose all their government retiree voters (and eventual government retiree voters).


20 posted on 07/21/2011 8:03:09 AM PDT by blueunicorn6 ("A crack shot and a good dancer")
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To: appalachian_dweller; OldPossum; DuncanWaring; VirginiaMom; CodeToad; goosie; kalee; ...

PING!!!


21 posted on 07/21/2011 8:08:10 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Kartographer

I think that we are at the very least in for a collapse much like that of Argentina’s ( http://www.youtube.com/watch?v=7yerKMQc7-w&feature=grec_index), but as a armed society with a very large entitlement minded population our collapse will be much more violent and I see many many small business wiped out by flash mob looting, and large scale violence (look at what happened just this past Memorial Day and 4th of July weekends)we are seeing these mobs grow bolder and bolder like:

Chicago’s CBS 2’s Jim Williams reports, the problem of mob attacks downtown is much bigger than the weekend beatings, according to beat cops who wanted to remain anonymous.”

And it’s not just Chicago, but Washington DC, Las Vegas, St Paul, Philadelphia and on most major big ‘Blue’ cities are increasingly reporting such flash mobs and gang muggings. Look what happened just this past weekend in Peoria, Il:

http://peoriachronicle.com/2011/06/25/peorians-living-in-fear/

Teenage Flash Mob Robberies on the Rise:

http://www.foxnews.com/us/2011/06/18/top-five-most-brazen-flash-mob-robberies/

Rash of violence isn’t flash mobs, it’s wilding

http://www.suntimes.com/news/roeper/5826624-417/rash-of-violence-isnt-flash-mobs-its-wilding.html

Teens in a mob assault and rob Center City patrons

http://www.philly.com/philly/news/20110629_Teens_in_a_mob_assault_and_rob_Center_City_patrons.html

Milwaukee Police Go Barney Fife On Mob Attacks

http://www.620wtmj.com/blogs/jeffwagner/125017329.html

Milwaukee Mob Victim Recalls Beating ... ‘Oh, White Girl Bleeds a Lot’

http://nation.foxnews.com/flash-mob-robberies/2011/07/06/oh-white-girl-bleeds-lot-race-mob-attack-rocks-milwaukee

I see what I call ‘Pocket Pogroms’ taking place in many big ‘Blue’ cities and if you aren’t a ‘0bamamite yute’ or one of ‘Holder’s People’ it’s going to get Reginald Denny bad for you very quickly.

For those who are just starting or are old hands at prepping you may find my Preparedness Manual helpfull. You can download it at:

http://www.tomeaker.com/kart/preparedness1i.pdf

For those of you who haven’t started already it’s time to prepare almost past time maybe. You needed to be stocking up on food guns, ammo, basic household supplies like soap, papergoods, cleaning supplies, good sturdy clothes including extra socks, underwear and extra shoes and boots, a extra couple changes of oil and filters for your car, tools, things you buy everyday start buying two and put one up.

As the LDS say “When the emergency is upon us the time for preparedness has past.”

Or as the bible says: A prudent man sees danger and takes refuge, but the simple keep going and suffer for it.
NIV Proverbs 22:3

“There is no greater disaster than to underestimate danger.

Underestimation can be fatal.”


22 posted on 07/21/2011 8:09:41 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Buckeye McFrog

What’s Soros buying this week?


23 posted on 07/21/2011 8:27:50 AM PDT by bgill
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To: blam

Not just banks. Large companies are stockpiling cash right now.


24 posted on 07/21/2011 9:00:03 AM PDT by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
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To: blam

Expanding the debt limit means more Fed money propping up Wall Street, keeping the market safe for whatever elitists that are left to play with it.


25 posted on 07/21/2011 9:03:06 AM PDT by pallis
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To: CodeToad

Large companies are stockpiling cash right now.

###

Fiat currency or REAL money?


26 posted on 07/21/2011 9:05:34 AM PDT by EyeGuy (2012: When the Levee Breaks)
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To: ZX12R

Just like if a boil needs lancing, just bite the bullet and lance it before blood poisoning sets in.

At this point the patient has a bad case of blood poisoning, not lancing the boil will just make the patient sicker.


27 posted on 07/21/2011 9:25:56 AM PDT by little jeremiah (Courage is not simply one of the virtues, but the form of every virtue at the testing point. CSLewis)
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To: blam; All

Does this article have any legs or is it just the writer’s opinion? Are hedge funds making significant shifts to stockpile cash in anticipation? I’d appreciate some secondary corroboration from FReepers if they know about this. Thanks for posting it. - OB1


28 posted on 07/21/2011 9:53:55 AM PDT by OB1kNOb (Financial Repression.......it answers a lot of questions.....read about it on FinancialSense.com.)
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To: blam

We will not default.

The US Treasury takes in roughly $200B/month. Figure about $51B for SSI and Medicare payments, about $6B for defense, about $30B in debt interest, and about $71B for all other essential services.

The “default” is a scare tactic that is being used by anyone concerned with their political career, rather than with what is best for America.


29 posted on 07/21/2011 4:21:24 PM PDT by snowrip (Liberal? You are a socialist idiot with no rational argument.)
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