Monday, Jul 14, 2008
Why the Fannie and Freddie bail-out means the dollar is doomed
MoneyWeek: Why the Fannie and Freddie bail-out means the dollar is doomed
The US government has been working on a bail-out for the companies all weekend, which it finally unveiled last night. But as usual, the government intervention is just storing up bigger problems for the future…
Posted by damien @ 11:40 AM (922 views) Add Comment
17 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. waitingfor hpc said...
goodbye $ - it was not so nice knowing you. So what will replace it - i hope the euro. Any thoughts?
2. greytornado said...
Add into the equation that a conflict looks all set to kick off involving Iran, anything is possible.
3. mrmickey said...
The euro, don't make me laugh why replace one piece of usless paper with another, this will come down as usual to military might and the euro zone ain't even got a pop gun to project it's influence unlike the US,China & Russia.
4. Beartil2010 said...
I said in another thread that this should devalue the dollar nicely.
I can't believe that the Indymac collaps and Dawnay-Day brink-of-collapse aren't getting more coverage at the same time.
Seriously, liquidate all your positions in any top-500 company in the US or UK and stick only to companies with real assets, or a business model that benefits from economic gloom. The key stock markets are going to continue downwards, the $ is going to take a hammering, and so is our currency.
Americans are now seeing people queuing up to beg for their desposits back - ie. savings and investments - anyone with over $100k will be moving it out of banks and into foreign climes asap!
5. nooneo said...
OPEC are still making noises about selloing barrels of oil in euros.
6. drewster said...
Beartil2010, where would you recommend sticking your savings? There are a few good companies which should weather the recession well (Halfords springs to mind: as people cut back on new cars they'll be buying bits for their old cars), but all shares are being sold indiscriminately by big institutional investors. To me the only safe-ish areas are gold (sorry to keep going on about it), possibly Swiss Francs, and the Japanese stockmarket. I think energy shares should do well too - things like oil services and equipment supplies (but not necessarily BP/Shell). What are your top picks?
7. waitingfor hpc said...
well - if i am not mistaken the Germany army is HUGE, the french navy larger than ours & that is just 2 countries out the EU not including the UK. Seems pretty powerfull to me. The Euro may be the glue that binds all these countries together for collective muscle??
8. mrmickey said...
waitingfor don't know many people who would lay down their lives for the fat cats in Brussels, might do for their country though.
9. beartil2010 said...
Drewster - I have:
10% FTSE shorting fund
15% Gold
10% small cap stock punts - either big profits or go bust
75% small to midcap companies: Gold miners, iron ore miners, diamond miners, copper miners, oil drillers & production. Also some personal insolvency companies - debt management is a good industry.
As industries go commodities is good - the companies actually own THINGS, as opposed to 'assets' like a sales pipeline. If a company has signed £1 million of business to be delivered to you over 2 years, that is a promise, whereas owning £1 million of an actual thing means you still have worth when the other company goes bust. See Warren Buffett for details, the richest man in the world is right about that one.
Yes key 'defensive' industries like you suggest are good. However, where a company is big enough to have a brand, people often buy on brand sentiment. This means money can go out of it based on general market conditions etc. which are no use. Plus your pension fund, for example, probably has a position in them - so if they start to liquidate positions to go to cash you see your stock price being hammered. This is why I prefer small caps, they are less liquid and can be volatile but at least you can actually see what you are buying.
I have taken a 4% hit over the last 6 months, due to general market deterioration. I made 50% on the 12 months before that which gives me a cushion. I expect all my commodities stocks to be volatile but to be good value medium term 1-3yrs, so I have held on to my positions. I expect the ftse shorting to be good value over the next year and the gold will either stay static or go through the roof, I am not sure.
As for specific picks... try Fairpoint Group, a british debt management company. Just delivering a new product set; took a big single-hit on a takeover of another company; good market presence and turnover, should start generating more and more money over the next 2 years - obviously that's just my opinion. I wanted to buy at 30p last month but I had no spare money - they are at 37p now.
10. beartil2010 said...
ps. For anyone who wonders why I didn't move my money, if you buy stocks on the AIM your buy-sell spread can be 15%, so you can't move your cash willy-nilly! If you sell you need to be sure it's the time to sell.
There are lots of buying opportunities at the moment, the next 6-9 months is when people should be buying shares IMHO. Just not in the FTSE.
11. Snafu said...
Troubled times indeed!
12. drewster said...
bear,
Thank you very much for those tips. You have an excellent portfolio. Mine is more heavily weighted towards gold, around 35% at present which is probably a bit high. I'm 20% in Japan and 20% in Taiwan (should pop nicely as relations with mainland China thaw). I'm in the middle of moving quite a bit into currency shorting via spread-betting, as I suspect sterling is overdue a pounding.
You're right to highlight the issues with AIM spreads. MoneyWeek recently explained the problem, and I'm minded to keep clear of that market as a result. In general there is a lot of dross on AIM and I'm not a skilled share-picker yet. I burned my fingers on AIM early with a careless pick, so now I prefer to invest in larger themes rather than in individual stocks. My portfolio is up 22% in the last 18 months - including that early mishap.
13. James said...
An excellent portfolio indeed. 110% before you've even started...
14. beartil2010 said...
Good luck on the currency front - the pound already has taken a pounding, it's just we don't get it publicised because we compare everything to the dollar. We are 19% down against the Oz dollar since feb and a similar amount against the Euro.
I have annoyed myself - I looked at my monitoring, I was considering buying Fairpoint at 22p! That's a 70% profit I have missed out on! Argh!
15. Geoff M said...
bear... I'm slightly worried, your percentages add up to 110%... I'd rework your spreadsheet if I were you ;-)
16. planning4acrash said...
Problem is, that our fiat money system encourages this speculation. If we had a sound money system, you would be talking about industry and real wealth generation, and savings would be safe, commodities and currencies stable.
17. beartil2010 said...
Thanks Geoff M - with numbers like that I should become an economist!