Serious considerations with global debt issues

[bellevuebully]

How many here are still holding stocks in trading/investment accounts? What about substantial amounts of $ in savings/cheqing accounts?

Have any of you seriously considered the likelyhood of institutional insolvency and the risk involved in staying tied to financial institutions?

The reason I am asking is that I am considering removing all forms of savings from institutions with the reason being that with the amount of debt problems in the world today, should there be one or more black swan events.....major stock market crash, another default from PIIGS, bond market crash.......and should it be systemic enough, what is the real chance of a period of time where the world is effectively insolvent? Could a period of global insolvency actually happen?

Share with me your thoughts.

[jaybone]

It could certainly happen.
With deposits, FDIC is severely under capitalized. It will of course be bailed out, but if a string of banks went down quickly, your funds could be tied up for some time.

Brokers usually hold securities in "street name" meaning they are registered with the DTCC under your broker's name, and they have an agreement with you to hold "your" shares for you. If they go bust, SIPC will ostensibly reimburse you for loss, but you will get FRN's, not shares. I believe that if your broker goes bust and for some reason SIPC does not cover it you would be an unsecured creditor to the busted brokerage.
I have some certificates, some still in street name, and some as book entries in my own name at the DTCC.
Cash on hand in a local credit union, only 4000 members, they only lend in my own county, 1st time mortgages only too.

Retirement accounts are pretty much held hostage unless I leave my job.

Core savings in the king of currencies.

[gunDriller]

The reason I am asking is that I am considering removing all forms of savings from institutions with the reason being that with the amount of debt problems in the world today, should there be one or more black swan events.....major stock market crash, another default from PIIGS, bond market crash.......and should it be systemic enough, what is the real chance of a period of time where the world is effectively insolvent? Could a period of global insolvency actually happen?

heck yeah it could happen - it did happen.

we watched it happen in 2008-2009 - cargo was sitting on docks because the Letter of Credit used to pay for its unloading were not accepted.

all they've done since then is to go deeper into debt & to print a bunch more $$.

if you are owed money by California or Illinois - you have an IOU of questionable value.

i think we will be seeing more defaults, and more acknowledgments of money printing.

last year on March 18, 2009, the government admitted to printing $300 Billion. gold went up about 8% in the next 24 hours.

recently, Bernanke was being interviewed by some congress person, maybe Ron Paul, and stated definitively when asked about a certain $1.3 Trillion - was it printed ? - "Yes, it was printed."

[bellevuebully]

This is an issue you see very little of, even in commentary and editorials from paper bears. If the fear of insolvency on a global basis is real, why are they not advocating pulling out of the institutions? If a(nother) soveriegn goes bust, which will happen, who will be bailing them out? Fannie and Freddie need more cash, the PIIGS are on the rocks, and the UK, US and Japan are all in lousy shape.

Who will be the bailer of last resort? Obviously, the p-press. In this environment, can institutional entities realistically operate day to day?

[Book]

How many here are still holding stocks in trading/investment accounts?



Nobody who spent more than an hour at the old GIM should be holding any stocks this late in the game.

Nobody.

:o

[bellevuebully]

How many here are still holding stocks in trading/investment accounts?



Nobody who spent more than an hour at the old GIM should be holding any stocks this late in the game.

Nobody.

:o


I hear ya Book. Reality is that many are still holding and advocating stock holdings. Many gold pundints are hugely bullish on the HUI/XAU while outlining the insolvency of system. I have been involved with metals since ~'01 and made a good shytload of $ on stocks, but seeing how ridiculously overleveraged the world is leads me to believe that one event could in fact lead to a widespread lock-up of commerce and solvency. Why are guys like Doug Casey, Puplava and whoever else not sounding this alarm? Is it too far fetched? or, is it because they make $ on newsletter subscriptions for which $300 per year is too much to read "buy and hold physical bullion" month after month? I think that has a lot to do with it.

Anywho, I'm about ready to fold in this game. I feel like I'm shooting dice in a back alley playing stocks in this environment.

[Book]

Anywho, I'm about ready to fold in this game. I feel like I'm shooting dice in a back alley playing stocks in this environment.



http://www.vigil.aero/files/images/skydiving/skydiving-skysurf2.jpg

Pull your ripcord Bellevue. You must have heard about that Ponce guy saying "If you don't hold it..."

:)

[bellevuebully]

Anywho, I'm about ready to fold in this game. I feel like I'm shooting dice in a back alley playing stocks in this environment.



http://www.vigil.aero/files/images/skydiving/skydiving-skysurf2.jpg

Pull your ripcord Bellevue. You must have heard about that Ponce guy saying "If you don't hold it..."

:)


I got a good jag of physical, the stocks are a sideline which up until this point had an acceptable level of risk. Basically, what we are saying here is that if stocks become illiquid due to a major crash, the miners/manufacturers/service providers loose all/most of their capital, and cease to function.........thats another dimension of our current reality.....it's hard to envision things getting that bad, but it seems as though it could happen.

And we haven't even considered yet an environment where credit flows resemble cold corn syrup.

[Sparky]

This is a possibility, but there are many scenarios. You should be prepared for as many as possible.

If there is a liquidity "flash freeze", yes, you will want to be in possession of more paper cash and precious metals than the next guy. But that's different than exiting all other asset classes completely.

Diversification means covering all the bases. What if the current crisis works itself out by a free market rise in deposit rates of 50%, and banks stop taking new accounts under such an extreme environment? You'd be screwed by not having an institutional account. What if the government liquefies the system by matching all current deposits dollar for dollar, while simultaneously slapping a 50% VAT on precious metals? Who knows what type of gaming we are in for over the next decade?

Own some of everything. Stocks, bonds, bank deposits, metals, cash, water, real estate, guns, Spaghetti-O's, toilet paper.

[bellevuebully]

Mr Sparky......like old times......quality feedback, thanks.

Like I mentioned in the original post, what I find strange is that all the commentators who mention insolvency fail to or refuse to talk about exactly how far that can go.

A 50 % rise in deposits?.....if the public thought the banksters were trustworthy, I could see it, but most have been assraped enough to see they are not, so I can't see that happening....not impossible, but improbable.

If the gov liquifies and matches deposits, $ worth shyt.

50% Vat tax = huge underground market.

Not trying to play devils advocate, I like what you are proposing as possibilities and solutions. These are the things we need to explore.

To be fair, I would still be quite diversified. It would leave me with 10% stocks due to a locked in retirement account, 60% physical, 20% cash, + home equity and solid employment. When I say diversified, I mean 'overweight metals diversified" ;D This is in addition to good preps, fresh water well, and game/timber filled land.

You could say I'm getting ready to strap in.

Thanks for the great feedback Sparky, I expect nothing less from you.

Cheers,
Bb

[osoab]

Like I mentioned in the original post, what I find strange is that all the commentators who mention insolvency fail to or refuse to talk about exactly how far that can go.

To be fair, I would still be quite diversified. It would leave me with 10% stocks due to a locked in retirement account, 60% physical, 20% cash, + home equity and solid employment. When I say diversified, I mean 'overweight metals diversified" ;D This is in addition to good preps, fresh water well, and game/timber filled land.


They probably can't speak of the horrors that would occur. They may laugh and joke about it sometimes when a good angle arises to bash someone, but they are propbably told what they will be saying next. Can't be stirring the cattle too much now.

They might not believe that anything could get that bad at all. I would guess, that most of them are stuck in the little vaccuum that exists for the rich and famous.

They seem to be doing their job well, though.

As far as on topic, I have some of the same ideas of investment as you, probably on a much lower total, though. I'm just trying to stay ahead of the game and come out a little ahead.

The threat of golbal insolvency, has already past. It's here now. We're living in a pretty good charade on the whole.

When the banks decide to pull the plug, happy fun time will end.

Whatever they throw at us, you know one thing, it won't be good.

[gunDriller]

Why are guys like Doug Casey, Puplava and whoever else not sounding this alarm?

i think Puplava is sounding the alarm. he talks about his own investments, e.g. buying a ton of silver last March 2009. he holds it in a foreign vault, i believe in Vancouver Canada.

and since he has people like John Williams and Matt Simmons on, people do get a full dose of doom-ology.

but Puplava "manages money for rich people". i don't think he would blow the whistle too aggressively, certainly not so aggressively as to piss off his clients.

[Sparky]

Mr Sparky......like old times......quality feedback, thanks.

Like I mentioned in the original post, what I find strange is that all the commentators who mention insolvency fail to or refuse to talk about exactly how far that can go.

A 50 % rise in deposits?.....if the public thought the banksters were trustworthy, I could see it, but most have been assraped enough to see they are not, so I can't see that happening....not impossible, but improbable.

If the gov liquifies and matches deposits, $ worth shyt.

50% Vat tax = huge underground market.

Not trying to play devils advocate, I like what you are proposing as possibilities and solutions. These are the things we need to explore.

To be fair, I would still be quite diversified. It would leave me with 10% stocks due to a locked in retirement account, 60% physical, 20% cash, + home equity and solid employment. When I say diversified, I mean 'overweight metals diversified" ;D This is in addition to good preps, fresh water well, and game/timber filled land.

You could say I'm getting ready to strap in.

Thanks for the great feedback Sparky, I expect nothing less from you.

Cheers,
Bb

First, I agree with you original point, which is that complete global insolvency is a taboo subject in the mainstream media. I think it's a fascinating topic. I still think it's a small likelihood (<5%), but large enough to consider and prepare for. More likely would be a brief (few days to weeks) financial paralysis, during which time you wouldn't want to have all your assets tied up in digits at some financial institution.

If things get really wild, what you might find is a series of rapidly changing scenarios. For instance, let's say there is a monetary dislocation that freezes cash availability. Then, those with cash would be king. This could trigger a government reaction of mailing every American $10,000 in FRN. Then cash would be trash, and PMs would rule. Then the gov't responds by imposing VAT plus strict regulation which drives activity into the black market, thereby raising the value of other black market barter items.

That's why I think the strategy is to cover as much of the board as you can, which includes some institutionalized money. Interesting food for thought.

[bellevuebully]

The threat of golbal insolvency, has already past. It's here now. We're living in a pretty good charade on the whole.

When the banks decide to pull the plug, happy fun time will end.

Whatever they throw at us, you know one thing, it won't be good.



No happy-ending???

I think the next serious bout of deflation will tell us a lot more of how precarious the situation is. I think it is upon us now. All the action is the same as the last bout.

[bellevuebully]

but Puplava "manages money for rich people". i don't think he would blow the whistle too aggressively, certainly not so aggressively as to piss off his clients.


I think that is pretty much the motivation. Can't say I blame them. Hard to know exactly what is going to happen.

[bellevuebully]

If things get really wild, what you might find is a series of rapidly changing scenarios.

Very likely.

I could see it all ending in global debt forgiveness, and then a war to hash out the injustices of the jubilee.

[oldmansmith]

Good advice Sparky, although I'm at zero stocks and will never own another. I like cash/gold and some silver for speculation, as well as bank account with some liqudity that I can afford to lose entirely.

Not to mention a big-ass garden all that stuff.

I think that this is "it," although maybe in slow motion..