Sold the home
Sold the stocks
Sold the gold
Sold the furniture
Sold the car
Sold the kids
And gone to cash...
(OK, maybe not the kids)
But you get the point. An epic rush to cash is underway - just look to the commodities market, the housing market and the bond market for clues
This is classic post-mania behavior, when liquidity and cash are king. From the HP bible, Manias, Panics and Crashes:
In the manic phase, investors scramble to get out of money and into illiquid things such as stocks, commodities, real estate or tulip bulbs: 'a larger and larger group of people seeks to become rich without a real understanding of the processes involved'.
Ultimately, the markets stop rising and people who have borrowed heavily find themselves overstretched. This is 'distress', which generates unexpected failures, followed by 'revulsion' or 'discredit'.
The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king.
October 06, 2006
Get ready to hear this the next few years: "If only we had sold everything and gone to cash"
Subscribe to:
Post Comments (Atom)
57 comments:
this is great, Keith panic is in full effect. This means there must be an opportunity coming soon. He has been so consistently wrong that is is scary. He is too afraid to short stocks (been wrong), he cant buy them (too late), cant buy gold (going down, been wrong), oil: got spanked, and we DO have too much of it in the spot market, although it is having a small bounce. Folks, Keith is a beaten man here, and he has no balls. All this tough "trader" talk is just that, talk. Go to cash! What great trading advice, you leftist, liberal, ball-less tool. "Cheers"!
The PM sector isn't done...some things will deflate, others will inflate. Knowing which will take intelligence, and sticking with it great fortitude.
"Sold the funiture"
Never thought about that. But you did didn't you. Sold te furniture that you paid $10,000 for for abot $200.
Great trade Kiethm what price will you buy it back at.
Don't you think that gov't making paper fiat for free would just print themselves silly to prevent a serious economic decline?
I'm trying to understand something ... why do so many more people comment on Ben's site than this one.
Could it be we seek information about housing, and not housing "with and attitude"? Could it be we don't give a flying F**K about politics?
I'm trying to understand why the same realtor troll posted five times under "anonymous"
welcome to the blog. how's the ramen going down these days?
Cash will be king......but so will gold and silver......they are currency as well, and no economic force/thought can change that.
There is no doubt that there will be asset deflation.....no matter how much money they decide to print, it will just go to pay off the massive amounts of debt already owed by the households.
No buyers = lower prices.....
Very simple, and no force in the world can stop it.
Keith,
As you are aware from my posts, I am both a big fan of this blog and of your position on the real estate bust.
With one exception.
Your call to "go to cash".
Please understand that due to our corrupt, fraudulent, fiat/fractional reserve/central banking/securitization/derivatives worldwide monetary system, the cash that you BELEIVE you have in a bank, CD or other account is NOTHING MORE than electronic digits offset by many mutiples of debt.
Your account can be instantly evaporated by:
1. A massive systemic monetary crisis (triggered by any entity in the monetary chain outlined above).
2. Governemnt response to #1 above, such as "freezing" accounts and issuing you a ten-year (or thirty-year) bond, inflating the currency to outlandish extremes, thereby diluting it's value, or just issuing a new currency with a cash-in rate of 100-to-one (or more).
Unless you have physical cash, physical gold and silver, you are NOT in "cash". And even then you will be facing confiscation issues as you will be branded a "seditionist" for attempting to protect your wealth.
realtor troll posted five times under "anonymous"
Why is it anyone that disagrees with you is either a "realtor" or part of the "REIC"?
butch - it's not my call - it's from the playbook - manias, panics and crashes. anyone arguing with that position to get to cash is arguing with the master.
I too was a fan of gold and metals, thinking the dollar is doomed. but now I'm balancing that thinking with this strong feeling of "flight to safety" and as of today, the US$ is seen as the safest currency when flying to safety, yes?
time will tell though. time will tell.
Missed it again Keith...
Much much more expensive oil = much much higher gold prices.
"it's from the playbook"
Keith the "play book"was designed with abundant and cheap oil available...
reule are changing and so is the play book.
better wake the F up buddy and stop sprayimy this blog with nonsense.
what about paying of the mortgage for those who held on to pre-bubble housing? less expenses to worry about when done.
It seems that people now expect interest rates to drop. If you couple this with an expectation that prices will drop as well seems like a major deflationary spiral is developing in the RE sector.
Why would anyone buy if they think prices and interest rates will be going lower?
Glad I am a "loser" renter
Precious metals will uncouple from commodities. Gold and silver and their stocks did well during the Great Depression, and that was a deflationary enviroment. Don't get fooled.
Not only that, we have large forces are work suppressing gas and gold right now to make things look good for the elections.
Not only that, gold and silver are international money. Once foreigners decide to divest themselves of US dollars, what do you think they'll invest in? Precious metals of course.
If the gov freezes bank accounts then all hell will break loose. I have my guns and ammo ready, but I don't think we will get to that point.
What is your opinion on markets in the U.S. that never went up in value? I moved to a market that was way undervalued. (Alabama) Nothing off the lake has went up much at all. I just can't see these markets crashing. Any Opinions? Thanks
Could this be the start of the Domino Effect everyone is talking about.
Well not everyone, some are still in denial. Like my Sister looking at $450,000 dollar homes and she is renting with cash in the bank. HELLO I tell her.
" I want my own space, to call my own"
what ever. Anyway
Downshift in jobs growth
September's payrolls growth works out to the weakest increase in 11 months, but revisions to previous months paint a skewed picture.
• Hand of the housing slowdown
http://tinyurl.com/lj62f
Keith is afraid of deflation, so he is holding the one asset that is guaranteed to continue to deflate as it has consistently for the last 100 years: the US dollar.
Genius.
I call this The Great Unwinding(TM)
All illiquid asset classes will decline in value as people move into cash
However, the price for consumable goods and services (bananas, healthcare, etc) will remain flat
All this while incomes will continue to decline, unemployment rises, and the economy falls apart
Unlike others on this blog, I take a stand, right or wrong, you know what I think. Cheers to those of you who post under a registered name, and jeers to those of you who post and flame as anon
Richard - as to oil, with the world economy crashing due to the US meltdown, I see oil demand slacking, supply having ramped up with the high prices, and a supply demand thing that causes oil to remain about where it is today if not lower. But I love my COP as a long term hold and possible acquisition target.
And again folks, just read about historic manias and panics - we've been here before (just not on this scale)
I wish I could sell my ass but I'm afraid I'm rather too skanky.
Anonymous said...
Don't you think that gov't making paper fiat for free would just print themselves silly to prevent a serious economic decline?
******
WRONG !!
the gov't dont print $$$. the FED ( a private bank does) and then it LENDS the NEW printed money to the gov't and the gov't pays interest to the FED.
the fed is owned by the goldmans the rothchilds etc.
every prez that tried to get from under the fed's money making umbrella has been assainated.
we are slaves to the int'l bankers. freedom, america is dead.
Don't you guys know how to diversify? You shouldn't be overweight in any one sector, and you should own a little bit of everything in order to be hedged. Yes that means even owning a little real estate, gold, silver, cash, CD's, stocks, bonds, etc! A dozen different eggs in your basket means you will have something to eat and somewhere to live.
The problem with gold is most people ( including myself ) treat it as a trade -- going back to dollars. If you disconntected that assumption, then no worries about physical gold. The gold is there if the bank disappears or the government disappears.
Just hedge your bets with some physcial gold and some physical cash. Put as much down on the house as possible if you did not buy at bubble prices -- say physical house. No debt in other words. Sounds like deflation to me.
The entire debt situation in the states is endentured servatide. Sheesh, tax 40% then pay interest. You left with what 10-20% or less.
These days seem to be more about control than economics. Throw in mass media brainwashing. I've always wondered how people have a free market with paper money. And if you did not have the paper money then a competitor can just buy your country out -- its about control.
when everything tanks diversification is silly
I'm diversified - $1, $5, $10, $20, $100
read the book
The PM sector isn't done...some things will deflate, others will inflate. Knowing which will take intelligence, and sticking with it great fortitude.
Totally agree. The high was May 12, since then its been downhill...
However, gold and oil rise on uncertainity, which is what we have right now. I'm convinced, and staying long, even though it tough to do so right now.
I wish I could sell my ass but I'm afraid I'm rather too skanky.
.....................
At least you admit you are a skank, see HP, is not only a bubble blog but it can be therapeutic also. Cheers
LauraVella said...
The PM sector isn't done...some things will deflate, others will inflate. Knowing which will take intelligence, and sticking with it great fortitude.
Totally agree. The high was May 12, since then its been downhill...
However, gold and oil rise on uncertainity, which is what we have right now. I'm convinced, and staying long, even though it tough to do so right now.
-------------------
Especially if north Korea decides to push the red button over the weekend, THEN! you will see major uncertainity. Is this the October suprise in the making?
Kind makes you say HMM!
Andys said: "Precious metals will uncouple from commodities. Gold and silver and their stocks did well during the Great Depression, and that was a deflationary enviroment. Don't get fooled".
I strongly agree with you Andys. Anyone can check out Newmont Mining's website and check their stock prices back through the entire decade of the 70's.
Good information.
About NK...
The news had a blurb that NK was pissed because one of their laundering banks got shut down. So, now they want a nuke test.
Charlie Munger - or was it WB - said if you spend 10 minutes foretelling the future you've wasted 10 minutes of your life.
But looking at the moveable feast, it seems that at the very least, some pretty tough times are in store. Risk, uncertainty and opportunity are proverbial bedfellows.
Warren Buffett folded his tent, and returned all money to his investors, in the early 70's because of an opaque market. Or, in other words, he was so perplexed he went to cash.
There are times when your balls, and your cash, should reside firmly in your trousers.
All you flamers are so off the mark...
At least Keith takes a stance and sticks to it.
Genius
As Rockefeller said, the key to real wealth is to "Own nothing, but control everything". Think about it, all you asset mongers.
President George W. Bush declared himself pleased on Friday with U.S. economic progress despite a Labor Department report that said U.S. employers added only 51,000 jobs in September.
Bush, who is trying to help his Republican party keep control of Congress in midterm elections November 7, cited a drop in the U.S. unemployment rate to 4.6 percent as good news and said wages are going up and energy prices are falling.
**'
He should be please..he at least has a job. Unlike the 500,000 REIC in california come 07.
If the banks or the currency go to hell, isn't the idea to hold physical gold or silver?
Investors trade paper, and it is nothing more than that, paper!
If i awoke to find the system has failed, how am i going to trade my paper for physical coin?
Some say holding coin is not safe, you should have a private firm store it for you.
Once again, do you really want someone else in charge or in control of your investment, Or to go bankrupt all together!
Oil, gas, other commodities, are one thing, it's hard to store 100,000 gallons of crude in your yard.
Don't be scared off in holding a little or alot of physical gold/silver. Yes, in can be tricky hiding it, but at least you have it!
Isn't that the idea?
Expect highs, lows, pullbacks, run-ups...it (gold/silver) are still the only units recognized and valued around the world...and has been for a while, and is sure to be tomorrow.
Good luck controlling everything!
Ted Kennedy can't even control himself!
My wife can't even control her checkbook!
Rockefeller?
Now there's another name that 'use' to mean someting!
Now their just another pompus selfserving joke!
Problem with that is,
Once you control everything, you Want to Own it!
Kinda like the Democrats!
"If i awoke to find the system has failed, how am i going to trade my paper for physical coin?"
Societal collapse is not a scripted event. Ask anyone who lived through the darker moments in WWII or had a bank account in Argentina during the fun days of '01.
The wise man will plan accordingly.
Amen
Not to many wise men left
There is some contradictory stuff posted by the tin-foil crowd:
(1) Many US debts will go bad
(2) All the foreigners will dump their bonds
(3) the money supply will explode in hyperinflation
(4) Fed will monetize debt
(5) Interest rates will explode
All of these cannot be simultaneously correct.
US debts going bad and banks deleveraging == destruction of money
It is possible that the Fed will increase money supply in such a way that adds new money only to replace the old money which evaporated due to debt abrogation.
If the Fed is going to monetize debt then by necessity the interest rates will be low---otherwise it is not working. CF Japan from the mid 1990's, as they basically were monetizing. If you think monetization is going to happen, then buy bonds (for the first few years) as yields go from 5% to 0%.
By the way, Argentina has 8-9% economic growth, now, and it's been like this for 2 or 3 years. The economy is better than before the devaluation---I have relatives who live there and are doing well. I visited recently and in the city center it is quite nice. There the problem in 2001 was a currency peg which was unsustainable. The US doesn't have this problem as it will not peg its currency to anything, nor should it. Banks could not guarantee dollar deposits because their central bank can't make dollars, only pesos.
Argentina survived a financial crisis worse than is likely to happen in the USA.
Banks will not fail in mass, and FDIC insurance will work. That, Bernanke is sure to pay off.
The dollar will trend 20% to 40% lower. A pain, but not catastrophic; and if people start "made in America" once again, perhaps better off in the long run, except for oil and BMW's costing more.
BTW: in Argentina 2001, you were much better off if you could buy property than hold cash.
Keith
You have a point. In the 90's I made a killing. People sold me their Rolex watches for $100 bucks. 14K gold at $3 an ounce. Cash is king, because you still need to pay bills and eat. At such a time those with the cash rule.
Anon 5:38:36 said: "Don't be scared off in holding a little or alot of physical gold/silver. Yes, in can be tricky hiding it, but at least you have it"!
My problem is... who will buy my physical gold? I can take it to my local coin shop I sapose, but they charge fees, dont know how much it is, but I can find out. And it seems like more of a hassle than buying shares of mining stocks.
To each his own.
"Richard - as to oil, with the world economy crashing due to the US meltdown, I see oil demand slacking, supply having ramped up with the high prices, and a supply demand thing that causes oil to remain about where it is today if not lower."
You need to do more research Keith...not quite so simple.
Keith, I thought you were saying 'cash is trash, buy gold and silver!!!' Now you're all about cash.....
lauraVella
My problem is... who will buy my physical gold? I can take it to my local coin shop I sapose, but they charge fees, dont know how much it is, but I can find out. And it seems like more of a hassle than buying shares of mining stocks.
---
http://apmex.com/
Borka,
I think the point is, to own silver coin,
which should be useful in the event of
SHTF. Remember the anecdotes of gas stations that would only take silver.
Gold is likely to get you killed...
Lots of stories like this from the
Argentina meltdown. Shit, just having
rolls of quarters is a good idea.
Pre '65 better yet.
Also, Borka, good to have you back.
Where you been?
Keith, you should be buying gold and gold
stocks now. We now have a nice bottom.
Oil and gold juniors are comming back
nicely.
-Maha
We are a slaves to the corporate state. This country has become the National Socialist dream. Get the people hooked on usary rate credit cards, ARM mortgages, and revolving credit. I heard today that there is debt out there that is 115% of the individuals gross yearly salary.
I think it's time to check out, tune out, walk out, and ignore our debt. No more slaves on Mas'a Bush's big plantation. Slaves we have nothing to lose but or chains!
Slaves had credit cards? I didn't know that!
If people don't want to get into debt, they don't have to.
Hard to know what happens to gold/silver.
Oil is tricky too. Oil stocks (like COP) are dirt cheap, the assumption is oil prices are temporarily high. Read up about peak oil though...no new basins discovered in decades, etc. The biggest fields in the world were discovered 50-60 years ago and are starting to age and die. New oil is hard to find. I don't think oil stays down long.
At $60 oil, COP is like 6x earnings. Very cheap.
Cash doesn't "deflate" as much as real estate. If you have 500K in cash, after the crash it's 500K. If you have a 500K house, it's worth 300K at most. So cash is better.
Stocks didn't do well during the great depression or during Japan's deflation either.
so cal, 47 jim, yeah i remember the days little deuce coupe, 2 girls for evert guy, turned into the hookers in times square NY.NY, yeah ,those were the days
Buy IEF (medium term US bond ETF), PSQ (NASDAQ short ETF) and high-powered handguns (long guns cannot be concealed easily).
I googled surviving the depression...general advice = cash/gold in basement of mortgage-less house.
I completely agree with Keith.
"Stash Cash" since "Cash is King"
Anyone holding debts will be in trouble. The costs of financing the debt will increase even if interest rates decrease since cash will be worth more in a deflation economy.
The second great depression is coming with the implosion of the credit bubble.
There is no way the FED can get us out of this one! It will take decades to work through the excess debt and lack of savings in America.
In regards to China, guess where the average Joe Chan is going to put his money? In US dollars, the international currency.
Also, instead of unchaining the Chinese Yuan to the US dollar, the Communist government will continue to discount their money and peg it at an even lower ration thereby pushing the US dollar into more deflationary pressure.
Don't be surprised when long term interest rates hit close to zero while people still won't buy cars and houses as everything will deflate!
Post a Comment