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 hedgefunds 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 United States 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 insurancecompanies, 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.”
Don’t miss: The Whole Debt Ceiling Debate Explained In 60 Seconds >
Sure they are if debt ceiling not raised, no QE3…then no money for parasitic banksters from the Fed in exchange for their toxic assets to go on public books. They will have to shut the digital redistribution of public wealth among top executives and investors and participate in more earthly business again..
Two words: Self Sufficiency. Also reading up on Weimar Republic and Zimbabwean hyperinflation can give a good idea as to how to prepare. Also web sites like http://www.jsmineset.com and http://www.thedailyreckoning.com give a good heads up.
Currently I’m out of the market, though my long-term indicators are bullish. Politicians seem about to throw out our baby with the bath water. If they allow cuts to Medicaid, Medicare, and Social Security and do not insist on heavy taxes on the rich, they will be cutting their own throats. We’ve been here before. After WWII, Truman adopted a plan to soak up marginal income above $400,000 (in today’s $$) with a 92% tax to fund rebuilding the country. Ike and JFK continued it[ ] and the result was economic boom times.
Newly reborn is a forward-looking, responsible view of government that attempts to address grave social ills.[ ] Politicians who let this baby starve will lose support of the middle class, the true engine of recovery.[ ] We must call the teabaggers’ bluff and put the result of their intransigence on their doorstep where it belongs. Giving in to them, now, makes as much sense as giving flamethrowers to drunks to light candles in Temperance Hall. Their dim eyes just gleam at the prospect, and we all get burned in the end.
Here’s yet more ammo ( Michael Linden, “The Myth of the Lower Marginal Tax Rates, Conservatives’ Go-To Growth Solution Doesn’t Hold Up.”, Center for American Progress, June 20, 2011. ) against teabagger bloviation and any thought of caving in to them. Note, our lowest economic growth rate, since the 1950, comes at a 35% tax rate for the top income bracket, where we are now. It seems the govt. knows better what to do with all that lucre than the hoarding super-rich who spend it only, it seems, to buy lower taxes for themselves.
PS… POWELL, et al, “Debt Limit Analysis”, BIPARTISAN POLICY CENTER,* JULY 2011.
http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL_0.pdf
* http://en.wikipedia.org/wiki/Bipartisan_Policy_Center
I must admit to a certain sang-froid on the prospects of default. Who owns T-bills anyway? …rich folks, big corporations, investment banks? …getting what’s coming to them right? I switch between stock funds and corporate money market. Blasé as a teabagger I was, until reading POWELL, above, and the following.* Joshua Holland, author of a book on political economics, says, among other things, that red states will get hit hardest, notably KY, WV, and MS …explains the recent turn-around of Sen. McConnell, doesn’t it?
* 5 Disastrous Consequences Of A Debt Ceiling Meltdown
We’ve been here before, the late 30s and late 40s-50s, not the late 70s as so many erroneously believe. Under FDR and Truman/Ike, demand and interest rates were falling, the opposite of the 70s, and the best solution was opposite, too, a tax-funded reinvestment in national priorities (see previous bit.ly links above). You might want to call your Congressman on this, to keep things rolling and make sure the fix doesn’t hurt working folks even more than the current mess.*
* http://www.cbpp.org/images/cms/9-9-09poverty-f1.jpg
http://www.cbpp.org/images/cms/9-9-09poverty-f2.jpg
http://www.cbpp.org/images/cms/9-9-09poverty-f3.jpg
Dis-regarding the purely financial only angle to this scenario, there are enough other spaceborne doomsday type scenarios on the horizon to justify a policy of keeping a certain amount of ready cash to hand – more than you would normally do.
If a large Coronal Mass Ejection from the sun hits Earth with little warning and fries
the electrics and electronics then life could be especially difficult without access to any savings you might have squirreled away at your local bank or building society.
Keep it under your mattress…you know it makes sense!
Like anyone at Wells Fargo can be trusted in their judgement
Every citizen of the USA should read the article at the link below. And every citizen will begin to understand what our government represents and how they have totally screwed the middle and lower class. I urge you to read the article and pass it on to everyone you know. This is unbelievable.
http://ampedstatus.org/how-your-social-security-money-was-stolen-where-did-the-2-5-trillion-surplus-go/
Good call Barracuda! Even if it only tells a small part of the problems facing the common man in the very near future.Even anonymous agrees with this one. lol It will take a miracle to save this planet and its people atm. And we better be careful whom that miracle comes from. As the first one isnt of the light! And mankind has been decieved to this point so that tptb and the antichrist can supply this miracle of Darkness!
may wall street rest in hell along with those who supported its fraud upon america and americans, good damn ridance.
Change your savings into Chinese money. That way you have some real hard cash when obambi drives the country bankrupt and the government falls. Spend a little bit on rope that is cheap, but is strong enough to break a politicians neck to reward them all for their participation in spending us to oblivion. Wait till the government falls, as there will be no law in force, and then we can hang them under Judge Lynch’s supervision…. Speed is of the essence in hanging them to be sure they cannot return under a new government and get elected again to plague us further.
@Anonymous 23 July 07:30:
Thanks much for the link. What a monstrous state of affairs. And both sides of the political aisle are culpable in the crime.
It’s clearly time for We the People to take back our country from the moneychanger crowd, and make sure they never get back in power again. But first things first: a wholesale throwing of the rascals out.
When the going gets tough, the tough get going. And the first weapon is education. Thanks for your part in that.
Since Before Its News really must be having a problem getting vital information out and is unable to live up to its objective (for whatever reason, political?), here’s the latest and greatest on the wonderful activities of NATO in Libya. They are destroying the water supply system and the factories that support the system. All thanks to F UK USA.
RAPE of LIBYA : GREAT MAN MADE RIVER reason for NATO attack
Libya S.O.S.
http://uruknet.com/?p=m79872&hd=&size=1&l=e