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Massive Shift In Funds To U S Underway

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7737957/Funds-embrace-America-in-flight-from-risk.html

Funds embrace America in flight from risk
The world's fund managers have seen the sharpest drop in risk appetite since the dotcom recession, losing faith in the "Goldilocks" recovery as China chokes off credit and the fuse blows on sovereign debt.
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:08PM BST 18 May 2010
Preference for the dollar over the euro is at the highest level ever recorded Photo: AP Photo/Udo Weitz
The May survey of investors by Bank of America Merrill Lynch showed revulsion towards the euro and European shares as funds battened down the hatches for a global "growth shock", switching their affections to "safe-haven" America in record numbers.
"Investors have capitulated on Europe, beaten down by sovereign debt concerns and faltering growth expectations," said Gary Baker, the bank's chief European equity strategist.

I am starting to see one or two benefits from my $ bullishness these days. We are seeing the EU imbalances finally unravelling what was a grande illusion that Europe could co-operate on more than a transient political level.

Merkel has said today that the Euro is in danger and its up tot he corrupt PIIGS to "change" their attitude toward living high without any effort. This is no different to the Brown illusion and we are about to pay for that 13 years of delusional economics. Have to admire Gerry really but they are rowing against a hurricane and will be dragged down with the rest unless they break free soon.

Meanwhile, I am only 10% in stocks now having unloaded several weeks ago. Almost 100% of my free cash is in US $ and I think we may start to see gold erode ever so slowly at first and picking up speed as the black hole in what will be left of the EZ draws in all the inflationary pressures with a great sucking sound that will be heard and felt around the world. Stay clear of anything in the Far East too. Bill Gross is da man!

FOREX latest to the USD:

Euro: 1.21925

Pound: 1.42856

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You've got about 18 months of dollar strength, tops RB.

And the first 6-12 of that will be marked by sterling strength, like it or not.

As soon as the US goes over 100% debt to GDP ratio - watch the dollar fall like a lead balloon.

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Bill Gross is da man!

Except he was very bearish on US bonds a month ago, precisely as they started their bounce off support as money flowed back into the dollar.

Some of us, ;), advised to go long bond at the time contrary to his 'position'.

Bill Gross may be da man if you give him your money to look after, but I'd pay the same attention to his public announcements in the same way I'd listen to a man sat opposite me at the poker table eyeing up my pile of chips.

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You've got about 18 months of dollar strength, tops RB.

And the first 6-12 of that will be marked by sterling strength, like it or not.

As soon as the US goes over 100% debt to GDP ratio - watch the dollar fall like a lead balloon.

HOT of the press--massive sell of of gilts to buy US treasuries--Pound will tank on this---story just off the wire no details but they picked it up from trading screens:

M&G Says Sell U.K. Gilts, Buy Treasuries on Inflation (Update1)
STORY TO FOLLOW.
Last Updated: May 19, 2010 05:49 EDT

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HOT of the press--massive sell of of gilts to buy US treasuries--Pound will tank on this---story just off the wire no details but they picked it up from trading screens:

M&G Says Sell U.K. Gilts, Buy Treasuries on Inflation (Update1)
STORY TO FOLLOW.
Last Updated: May 19, 2010 05:49 EDT

Temporary. Sell off before the huge bounce.

Don't say you weren't warned!

Edited by AvidFan

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HOT of the press--massive sell of of gilts to buy US treasuries--Pound will tank on this---story just off the wire no details but they picked it up from trading screens:

M&G Says Sell U.K. Gilts, Buy Treasuries on Inflation (Update1)
STORY TO FOLLOW.
Last Updated: May 19, 2010 05:49 EDT

someone takes the opposite view and will be buying the sold items.

course, CDS and naked shorters wont be buying or selling anything at all.

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Temporary. Sell off before the huge bounce.

Don't say you weren't warned!

Mind you, I'm now thinking this cycle is so large, it could be next year before sterling takes off.

This thing is way, way bigger than anything we've see in the last 40 years.

Edited by AvidFan

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Mind you, I'm now thinking this cycle is so large, it could be next year before sterling takes off.

This thing is way, was bigger than anything we've see in the last 40 years.

Summed up very accurately.

This is seismic. The bank collapse was not cyclical but structural (they are all busted but for sovereign intervention and now its sovereign debt that is on the table for consideration by the markets). The fall out is yet to be fully felt and we may also be witnessing the collapse of the EZ as Merkel is obviously preparing for the inevitable by her recent statements and actions to limit the damage.

I believe we will follow the pattern of Japan and fall into a very deep black hole that will be caused by an outflow of funds, collapse in confidence that will last a generation and a global recession. The double dip is on and the second bit will not bear any resemblance to the first. It will be many times deeper and longer.

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Summed up very accurately.

This is seismic. The bank collapse was not cyclical but structural (they are all busted but for sovereign intervention and now its sovereign debt that is on the table for consideration by the markets). The fall out is yet to be fully felt and we may also be witnessing the collapse of the EZ as Merkel is obviously preparing for the inevitable by her recent statements and actions to limit the damage.

I believe we will follow the pattern of Japan and fall into a very deep black hole that will be caused by an outflow of funds, collapse in confidence that will last a generation and a global recession. The double dip is on and the second bit will not bear any resemblance to the first. It will be many times deeper and longer.

If you acknowledge that there is a sovereign debt problem, including that of the US, why such a faith in the USD? It's not like they aren't playing keepy uppy in the markets too.

Looking at the bigger picture, I can only see pain for all the major currencies. Deflation will lead to failing banks and more bailouts, which is what can flip currencies into hyperinflation. They still can't let the banks fail for the same reasons as a couple of years ago, although it's even worse now, as they have ploughed more money into "saving" them.

I just can't see why you are so bullish on the dollar, unless you are talking short term and have the time to keep your eyes on the ball. For the rest of us, playing the markets probably isn't the best idea and buying "stuff" seems like a safer bet, at least IMO anyway.

Edited by Traktion

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The thing is, if the dollar collapses, what will rise? None of the other major currencies are better.

Euro? - F*cked (will it even exist for another decade?)

Sterling? - Worse shape than the USA (we might benefit from inflation, so we will get some)

Yen? - Biggest debt pile in the world

RMB? - They have their own bubble to contend with and a coming sociopolitical Sh1tstorm.

The only way out that I can see is politically impossible - namely big benefit cuts to welfare, pension and medical spending programs that make up to half of spending in western budgets.

They will try to inflate and we will get a breather for a while, but eventually it is either default or cut or a mixture of the two.

Seismic doesn't even begin to cover it, we could be seeing the ultimate failure of the "social democratic" experiment that started after the great depression.

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If you acknowledge that there is a sovereign debt problem, including that of the US, why such a faith in the USD? It's not like they aren't playing keepy uppy in the markets too.

Looking at the bigger picture, I can only see pain for all the major currencies. Deflation will lead to failing banks and more bailouts, which is what can flip currencies into hyperinflation. They still can't let the banks fail for the same reasons as a couple of years ago, although it's even worse now, as they have ploughed more money into "saving" them.

I just can't see why you are so bullish on the dollar, unless you are talking short term and have the time to keep your eyes on the ball. For the rest of us, playing the markets probably isn't the best idea and buying "stuff" seems like a safer bet, at least IMO anyway.

When America sneezes Europe catches a cold.

America caught a cold, a bad cold.

As for inflation--not so sure on this. Logic dictates that when bubbles deflate deflation follows. Almost tautologous.

We have seen a structural collapse in the banking industry propped up by government's that are just as broke. Demand will collapse in China when their corrections comes (some say it is just starting--Bubb is offloading part of his Far East portfolio). The world is awash with supply and overcapacity. The spending binges are over. Inflation may be localised due to currency drops but overall the bubbles have to DE-flate. Warren Buffett said as much a couple of years ago when he predicted all of the bubbles would burst.

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I am the walrus.

:lol:

Good 'ol Peter Schiff.

I'm 100% dollar, but looking at gold as the next step, later this year.

I'm scared to death, though, that we'll get another 'emergency' G20 meeting soon...and QE2...

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When America sneezes Europe catches a cold.

America caught a cold, a bad cold.

As for inflation--not so sure on this. Logic dictates that when bubbles deflate deflation follows. Almost tautologous.

We have seen a structural collapse in the banking industry propped up by government's that are just as broke. Demand will collapse in China when their corrections comes (some say it is just starting--Bubb is offloading part of his Far East portfolio). The world is awash with supply and overcapacity. The spending binges are over. Inflation may be localised due to currency drops but overall the bubbles have to DE-flate. Warren Buffett said as much a couple of years ago when he predicted all of the bubbles would burst.

But if we have deflation, banks will fail unless they are bailed out; their balance sheets are just too weak to take it. Sovereign defaults will stoke this deflationary process.

Do you really think they will let the banks fail? Do you really think that they won't print to prevent this, even if they can't raise the money on the bond markets?

They didn't let the banks fail the first time and I'd be incredibly surprised if they let them fail a second time, this time loaded with taxpayer's money*.

Deflation can only be allowed to play out if the governments don't bail/print. They have started printing and I can't see why they would stop. They will spin it as the lesser of two evils right up until hyperinflation. What choice do they have?

Maybe the dollar will appeal for a while (as "safety"), but the US has its own problems and they're bound to come to a head sooner or later.

EDIT: * And if they don't bail out the banks, people will start losing/risking their deposits. Queue runs on banks, dash for assets etc. Deflation destroys deposits, which will leave its own trail of devastation, should the bail outs not materialise.

Edited by Traktion

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All 3 monetary aggregates pointing DOWN in the US now:

sgs-m3.gif?hl=ad&t=

It's just a black hole where all the dollars use to be, RB. It's not based on economic strength.

Wait till the debt:GDP ratio gets over 100% and they start printing again...

Edited by AvidFan

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EDIT: * And if they don't bail out the banks, people will start losing/risking their deposits. Queue runs on banks, dash for assets etc. Deflation destroys deposits, which will leave its own trail of devastation, should the bail outs not materialise.

I'm sure RBs deposits are insured!

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I'm sure RBs deposits are insured!

Yeah, I'm sure they are - by the government. So, the taxpayers and/or the printing press will have to stump up any cash should they be tested.

The taxpayer (or printer) bails out the banks one way or another; either by keeping them afloat or paying back the depositors if/when it collapses. As the former seems to be cheaper for the government (at least in the short term), I would imagine they will stick to the same strategy.

Maybe at some point, they will consider changing the way the banking system works (to something like LPB, perhaps), but I can only imagine that happening after another collapse.

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Yeah, I'm sure they are - by the government. So, the taxpayers and/or the printing press will have to stump up any cash should they be tested.

The taxpayer (or printer) bails out the banks one way or another; either by keeping them afloat or paying back the depositors if/when it collapses. As the former seems to be cheaper for the government (at least in the short term), I would imagine they will stick to the same strategy.

Maybe at some point, they will consider changing the way the banking system works (to something like LPB, perhaps), but I can only imagine that happening after another collapse.

Could I ask what LPB is? Thanks

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Yeah, I'm sure they are - by the government. So, the taxpayers and/or the printing press will have to stump up any cash should they be tested.

The taxpayer (or printer) bails out the banks one way or another; either by keeping them afloat or paying back the depositors if/when it collapses. As the former seems to be cheaper for the government (at least in the short term), I would imagine they will stick to the same strategy.

Maybe at some point, they will consider changing the way the banking system works (to something like LPB, perhaps), but I can only imagine that happening after another collapse.

Your point/s make the assumption that any future problems CAN be resolved by printing money. I think some on here - RB for instance - are pointing to a shift in the problem/s from private debt to sovereign debt crisis which means your argument that governments won't allow collapse to occur assumes that the very governments are capable of making sure they don't. And that is not necessarily the case if a crisis of 'seismic' proportions occurs. Question: governments bailed out the banks but who bails out the countries?

I think your assumptions are based on a problem of lesser size than others think there is which is why you think governments won’t allow collapse to happen but others think governments won’t be able to take action of the scale required to bail them out. Pop goes the balloon - can you stop a balloon from popping once the needle has gone in?.

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Your point/s make the assumption that any future problems CAN be resolved by printing money. I think some on here - RB for instance - are pointing to a shift in the problem/s from private debt to sovereign debt crisis which means your argument that governments won't allow collapse to occur assumes that the very governments are capable of making sure they don't. And that is not necessarily the case if a crisis of 'seismic' proportions occurs. Question: governments bailed out the banks but who bails out the countries?

I think your assumptions are based on a problem of lesser size than others think there is which is why you think governments won’t allow collapse to happen but others think governments won’t be able to take action of the scale required to bail them out. Pop goes the balloon - can you stop a balloon from popping once the needle has gone in?.

In zimbabwe the government printed money. This prevented collapse of the banking system. It also wiped out all Zim dollar liabilties.

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Your point/s make the assumption that any future problems CAN be resolved by printing money. I think some on here - RB for instance - are pointing to a shift in the problem/s from private debt to sovereign debt crisis which means your argument that governments won't allow collapse to occur assumes that the very governments are capable of making sure they don't. And that is not necessarily the case if a crisis of 'seismic' proportions occurs. Question: governments bailed out the banks but who bails out the countries?

I think your assumptions are based on a problem of lesser size than others think there is which is why you think governments won’t allow collapse to happen but others think governments won’t be able to take action of the scale required to bail them out. Pop goes the balloon - can you stop a balloon from popping once the needle has gone in?.

Any country/monetary block can print, should it choose to do so. Sure, you may break a few treaties, but when needs must!

My assumption is that they won't just go "ah well, all that bailing didn't work, so we better just suck it up then!" Those who can't print will default and those who can print, will print (a technical default).

As for the problem not being resolved by printing, it depends what you mean. Printing won't put us on a path to growth and prosperity, but it will get the debts paid off. At what cost? Probably rampant (hyper)inflation and the destruction of big chunks of the economy. The books may then balance, but the promised productivity will never have happened.

The alternative would have been to let the banks fail, but the stakes have already been increased now, so they either accept a bigger loss or keep on bailing and hoping for the best. If they give up on the tactic they have been using so far, they would lose all they have put in so far to "fix" it. It's like a gambler trying one... more... time... to get their money back, even when everyone around them can see it's a mugs game. They should quit while they still have their shirt, but they will end up on the street with nothing... ;)

Edited by Traktion

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In zimbabwe the government printed money. This prevented collapse of the banking system. It also wiped out all Zim dollar liabilties.

Exactly.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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