US faces global funding crisis, warns Merrill Lynch

Telegraph (UK) ^ | Ambrose Evans-Pritchard

[bruinbirdman]

""Global Insight". Never heard of it."

"Global Insight is the world's largest economics organization, serving over 3800 clients in industry, finance and government world-wide, . . ."

yitbos

[ghostrider]

I wonder where all those a$$holes went that were preaching about the stupidity of our gold. I am currently sitting on a 1,000 percent profit in my leveraged gold fund. I keep trying to unload it, but it keeps going up higher than I can reach.

[what's up]

I got a good deal on American Airlines stock today.

The stock has been slammed as oil has gone up, up, up.

AMR not be quite at bottom (earnings will be announced tomorrow so it may take a dive) so I reserved more funds to double down and buy more if I need to...but it's not far from bottom. Some of these stocks are at fire sale prices.

The increasing hysteria, high volume, and media shouting over the last few days signals we are close to bottom.

[Nick Danger]

Tralala, let the good times roll!

OK, I'll blow you off too. If that's your idea of defending what you said, no one need spend any time considering anything you have to say.

[TigerLikesRooster]

I am not sure raising bond interest would help. In case of Chinese, they may want to recoup their loss by seizing U.S. assets in China, if dollar tanks too low and their bond holding would pay little or no return.

[Freedom_Is_Not_Free]

I am ashamed to admit I was asleep at the wheel, and didn't pay much attention to Greenspan. Call me nuts, but it wasn't until Greenspan voluntarily steeped down and didn't seek another term as Fed Chairman, that I grew suspicious. I started to wonder why a man, despite his age, who was so in love with the power and position would just walk away from it while he was still healthy. My assumption was that the sheet must be due to hit the fan, and I started studying. That lead me to see what I think you also see, although I think you are way ahead of me in terms of seeing it.

It's frightful to think of it. If the confidence game goes completely sour, if the world doesn't want US bonds and US dollars, we are going to go back to the dust from whence we came. Not as bad, but if distrust among the banks continues, due to complete blindness from lack of financial transparency where the toxic waste is still hidden, then the whole machinery will just shut down and the avalanche of insolvencies will just take us there that much faster.

All I can say to the bankers is...

[eyedigress]

"A good commodities trader is nice at all times."

Economics 101

:^)

[what's up]

Thanks for the info.

Economics organization?

Kind of an unusual description. I wonder what they do primarily. Are they a bank? Research? Investment?

[eyedigress]

It’s risky but a trader you are. Good Luck!

[ghostrider]

Ha! I know I should keep my trap shut, but it is like turning the other cheek. Eventually the devil in me just has to slap them back.

[Freedom_Is_Not_Free]

Most people expect to see very high inflation. I am starting to come around to the probability that high inflation is only temporary. A severe credit crisis and all of the losses from plunging house prices could lead to deflation. We did have inflation with no GDP growth in the 70s, so it is possible. But I am starting to lean toward the idea that the contraction economy will be so severe, it will squelch inflation.

The downside is, your assets will be squelched as well. Cash will be king, unless I am missing something. I do hope and pray we just have a recession ala 1982, but I am not so sure anymore. I expect something more severe with a good bit of deflation and wealth destruction. But I am just guessing — educated guess, so who knows. We will only know in hindsight.

[Zhang Fei]

But the lion’s share is held by the central banks of China, Russia and petro-powers.

This is wrong. The lion's share is held by Americans. The lion's share of the foreign-held debt is owned by Japan and China.

[eyedigress]

You will notice them less for now, they’ll be back on the next cycle. By then I shall have re-invested. Good Luck and Happy Hunting.

[Chgogal]

A lot of peoples’ wealth is in their homes. Homes are way over valued, IMHO. I cannot believe the home prices. They are insane. But people are so used thinking they are paper rich they will freak out when their homes devalue to more normal levels.

[Zhang Fei]

Last year he was extolling our economy.

Evans-Pritchard is a great admirer of the way the US economy is organized. What he sees here is not the collapse of the US economy into a Mad Max-like state - it's a credit bubble-related collapse. What he's saying is that we might be seeing our first serious recession since the early 1980's.

[ghostrider]

If all this excess cash caused the problem, why would one be secure holding it - unless it is gold. Some folks have been saying that a financial crash is all part of the plan to get us to trade worthless Dollars for Ameros.

[Antoninus]

It’s just frustrating. It is like seeing floodwater come down a mountain with hours to spare and nobody is willing to evacuate town. Just very frustrating.

The reason so few people take the apocalyptos seriously is because they tend to yell "wake up, the end is near!" but never propose a solution to the problem. You say, "protect yourself". Really? How?

[Freedom_Is_Not_Free]

T McGee was talking about agency debt. As you can see from the picture below, Japan does not hold enough agency debt to even be listed. You are correct to the extent that Japan is the #1 holder of US T-Bills, followed by China, IIRC.

[what's up]

Thanks.

I'm pretty sure this will be a profitable trade.

[Freedom_Is_Not_Free]

Move to cash. Get out of debt. Reduce spending. Reduce investing. That is my prescription. If the economy doesn’t go downhill, you’ve mistimed some bargains on that rental property or on that stock you wanted. Big deal.

But it is all too easy for people today to see house prices down and think it is time to invest in property. Or they see stocks oversold and pump heavily, figuring they can liquidate the cash when needed.

It is a good time to be in cash, a good time to be out of debt and a good time to reduce spending and to save. That is about all you can do. You can’t build a castle and fill it with mercenaries and peasants...