Skip to comments.It Has Started: Wall Street Is Preparing For A Doomsday Scenario
Posted on 07/21/2011 7:26:09 AM PDT by blam
It Has Started: Wall Street Is Preparing For A Doomsday Scenario
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.
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 ...
On the bright side, the NYT and Goldman Sachs may go broke. Wishful thinking, I know....
If it’s inevitable, just bring it on and get it over with.
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?
Women and Minorities hurt most.
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.
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.
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.
up 130 points this morning.
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.
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.
+136 as I post.
Any default would be a huge “win” for Omoslem.
Communist moslems trying to sink the USA used to be called “traitors.”
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.
DJI 12,728.95 Up +157.04 +1.25% Really?.............
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.
“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?
They have to keep the Dow up or they’ll lose all their government retiree voters (and eventual government retiree voters).
I think that we are at the very least in for a collapse much like that of Argentinas ( 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:
Chicagos CBS 2s 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 its 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:
Teenage Flash Mob Robberies on the Rise:
Rash of violence isnt flash mobs, its wilding
Teens in a mob assault and rob Center City patrons
Milwaukee Police Go Barney Fife On Mob Attacks
Milwaukee Mob Victim Recalls Beating ... Oh, White Girl Bleeds a Lot
I see what I call Pocket Pogroms taking place in many big Blue cities and if you arent a 0bamamite yute or one of Holders People its 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:
For those of you who havent started already its 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.
What’s Soros buying this week?
Not just banks. Large companies are stockpiling cash right now.
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.
Large companies are stockpiling cash right now.
Fiat currency or REAL money?
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.
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
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.