Batten down the hatches and get into cash
13 July 2011, 09:25 AM
#61
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Bailouts rollover and delay, buying time. A defualt event means that not only is the money cycle starved internationally with ramifications of contaigon to neighbouring peers, but it is also an event that triggers credit defualt swaps, which then saps liquidity of of the investment bank, insurance and reinsurance worlds. Basically Lehman and AIG on a much bigger scale......
That reality would make a double dip recession seem like a summer fair!
There is too much to lose, China will not want this, US will not want this and you can bet the Eurozone don't want this. It is a bigger consequence than the events leading upto the demise of 2008. Only back then international gov. were relatively strong and healthy, with the past years taking their toll, debt levels pretty much max'd, there is no arsenal there to help promote more growth and get the spending cycle going, you cant set rates lower than they currently are, you can't afford to raise them to curb inflation pressure......the only thing they can do is create some form of SPV to house this bad debt, readdress the rules of the EU and ECB and reformat, hardly a solution but its an attempt at deterring the unthinkable demise should the chain reaction reach ignition....
13 July 2011, 10:36 AM
#62
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Being in cash is not as smart or easy as is being made out. Where are you going to put the cash? If the **** really hits the fan I will be feeling massively uncomfortable with my cash in the bank and I use BNPParibas which are one of the few top rated banks left in the world.
To all those guys with gold and silver etc, it's a safe haven for sure but make sure you are holding the physical because likewise if the **** really does hit the fan good luck trying to get delivery. It will be absolute chaos if Greece defaults and if Italy break through a 7% yeild on their 10 years they are shafted as well.
To all those guys with gold and silver etc, it's a safe haven for sure but make sure you are holding the physical because likewise if the **** really does hit the fan good luck trying to get delivery. It will be absolute chaos if Greece defaults and if Italy break through a 7% yeild on their 10 years they are shafted as well.
13 July 2011, 11:16 AM
#63
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Agree with this 100%. Okay, you might lose 10% or 20% but in the long run will probably be okay and at least it won't become worthless like your cash in the bank could! I particularly like prime Dublin property. Off in some cases 80% from it's highs.
13 July 2011, 12:14 PM
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There is a great article in The Times today that gives a very simple explanation of why so big and why now.
Italy has the third largest bond market in the world, after the US and Japan. (Not surprising and bonds were pretty much invented in Italy).
The Euro Finance Ministers have recently talked of helping Greece by setting up a deal to relinquish Greek bonds at 50 cents on the Euro.
This immediately sent a message to other bond markets that if there is risk of default then bonds could be marked down (the opposite of moral hazard?!).
So Italian bonds running at near 100% value - were suddenly sitting there at a 70-80% of face value. With this risk, Italy will not be able to refinance its debt.
So a big risk suddenly becomes an insurmountable risk.
There are two options - immediately federate Europe and syndicate the risk; or cut the Med countries loose to fail on their own.
Neither is palatable.
They both come with major risks.
Italy has the third largest bond market in the world, after the US and Japan. (Not surprising and bonds were pretty much invented in Italy).
The Euro Finance Ministers have recently talked of helping Greece by setting up a deal to relinquish Greek bonds at 50 cents on the Euro.
This immediately sent a message to other bond markets that if there is risk of default then bonds could be marked down (the opposite of moral hazard?!).
So Italian bonds running at near 100% value - were suddenly sitting there at a 70-80% of face value. With this risk, Italy will not be able to refinance its debt.
So a big risk suddenly becomes an insurmountable risk.
There are two options - immediately federate Europe and syndicate the risk; or cut the Med countries loose to fail on their own.
Neither is palatable.
They both come with major risks.
13 July 2011, 12:59 PM
#69
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For once I can see where the property bulls are coming from. What John is saying is spot on IMO, it's about the only thing safe from the stupid things policy makers and the central bankers are likely to do in the event of a crisis. Real term drop, maybe, but at least you'll still have something.
13 July 2011, 01:15 PM
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I suggest the property bulls should take a tour of Florida, Detriot and some bits of Texas.
There you can see how a million dollar property investment can turn into a piece of scrub worth 47 cents and lucky bag!!!!
There you can see how a million dollar property investment can turn into a piece of scrub worth 47 cents and lucky bag!!!!
13 July 2011, 01:26 PM
#74
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Haven't read the whole thread ... but getting into cash may not be the answer (certainly not into cash in the Bank, ANY Bank!).
The Banks will fold and your money with it - we saw how Governments walk away from 'Guarantees' when it suits them.
Money under the mattress saves it - but, it will be worthless within weeks in any case as rampant inflation takes hold.
I have been thinking about property, or anything I can touch, feel and enjoy .... as, even if it drops 50% in value you still have 50% and something to enjoy.
A couple of houses, a new Aston Martin and waste the rest might seem to be the wisest of all choices.
It is starting to get really worrying .... we ain't seen nothing yet - that's for sure!
The Banks will fold and your money with it - we saw how Governments walk away from 'Guarantees' when it suits them.
Money under the mattress saves it - but, it will be worthless within weeks in any case as rampant inflation takes hold.
I have been thinking about property, or anything I can touch, feel and enjoy .... as, even if it drops 50% in value you still have 50% and something to enjoy.
A couple of houses, a new Aston Martin and waste the rest might seem to be the wisest of all choices.
It is starting to get really worrying .... we ain't seen nothing yet - that's for sure!
13 July 2011, 02:15 PM
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Very true. That's why you need to be careful what you buy and the price you pay. Hence why I mentioned Dublin. The mugs were buying at 5 times the price you can buy now. 3m houses are going for 600k now. 10m houses going for 2m. Prices now make sense. 5 years ago they didn't. Just like 5 years ago the prices in Florida and Texas were crazy. If you can buy anywhere decent now, in a good area that you have a realistic chance of renting at a reasonable price, and accounting for 3 months empty a year make 4 or 5% you are doing okay I think. The world has changed and protecting your wealth is now the name of the game. A few guys on here were buying gold and did well but I say again to them, make sure you take delivery. When the **** hits the fan your clearer / spread beter will go bust and you won't be paid out. If you want real security TAKE DELIVERY!
13 July 2011, 02:57 PM
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The consequence is so dire that this issue is too big to be left to fail. Some form of internationally agreed resolution will have to be drawn up as if EU goes the whole house comes down around it.....that makes it in every countrys interest to have a remedy agreed and implemented
13 July 2011, 04:07 PM
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13 July 2011, 04:33 PM
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13 July 2011, 04:39 PM
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Haven't read the whole thread ... but getting into cash may not be the answer (certainly not into cash in the Bank, ANY Bank!).
The Banks will fold and your money with it - we saw how Governments walk away from 'Guarantees' when it suits them.
Money under the mattress saves it - but, it will be worthless within weeks in any case as rampant inflation takes hold.
I have been thinking about property, or anything I can touch, feel and enjoy .... as, even if it drops 50% in value you still have 50% and something to enjoy.
A couple of houses, a new Aston Martin and waste the rest might seem to be the wisest of all choices.
It is starting to get really worrying .... we ain't seen nothing yet - that's for sure!
The Banks will fold and your money with it - we saw how Governments walk away from 'Guarantees' when it suits them.
Money under the mattress saves it - but, it will be worthless within weeks in any case as rampant inflation takes hold.
I have been thinking about property, or anything I can touch, feel and enjoy .... as, even if it drops 50% in value you still have 50% and something to enjoy.
A couple of houses, a new Aston Martin and waste the rest might seem to be the wisest of all choices.
It is starting to get really worrying .... we ain't seen nothing yet - that's for sure!
13 July 2011, 04:41 PM
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13 July 2011, 06:27 PM
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Allow private companies to launch competing currencies backed by gold and watch how quickly the pound turns to toilet paper. The only reason people use a pure fiat is because there is no other option.
13 July 2011, 06:46 PM
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In short no.
Bailouts rollover and delay, buying time. A defualt event means that not only is the money cycle starved internationally with ramifications of contaigon to neighbouring peers, but it is also an event that triggers credit defualt swaps, which then saps liquidity of of the investment bank, insurance and reinsurance worlds. Basically Lehman and AIG on a much bigger scale......
That reality would make a double dip recession seem like a summer fair!
There is too much to lose, China will not want this, US will not want this and you can bet the Eurozone don't want this. It is a bigger consequence than the events leading upto the demise of 2008. Only back then international gov. were relatively strong and healthy, with the past years taking their toll, debt levels pretty much max'd, there is no arsenal there to help promote more growth and get the spending cycle going, you cant set rates lower than they currently are, you can't afford to raise them to curb inflation pressure......the only thing they can do is create some form of SPV to house this bad debt, readdress the rules of the EU and ECB and reformat, hardly a solution but its an attempt at deterring the unthinkable demise should the chain reaction reach ignition....
Bailouts rollover and delay, buying time. A defualt event means that not only is the money cycle starved internationally with ramifications of contaigon to neighbouring peers, but it is also an event that triggers credit defualt swaps, which then saps liquidity of of the investment bank, insurance and reinsurance worlds. Basically Lehman and AIG on a much bigger scale......
That reality would make a double dip recession seem like a summer fair!
There is too much to lose, China will not want this, US will not want this and you can bet the Eurozone don't want this. It is a bigger consequence than the events leading upto the demise of 2008. Only back then international gov. were relatively strong and healthy, with the past years taking their toll, debt levels pretty much max'd, there is no arsenal there to help promote more growth and get the spending cycle going, you cant set rates lower than they currently are, you can't afford to raise them to curb inflation pressure......the only thing they can do is create some form of SPV to house this bad debt, readdress the rules of the EU and ECB and reformat, hardly a solution but its an attempt at deterring the unthinkable demise should the chain reaction reach ignition....