As we get closer to the debt ceiling deadline, I have to ask (seriously): it it time to sock all of our savings under a mattress, at least for a few months?
I can’t be the only person asking this, right?
by DougJ| 153 Comments
This post is in: Their Motto: Apocalypse Now, We Are All Mayans Now
As we get closer to the debt ceiling deadline, I have to ask (seriously): it it time to sock all of our savings under a mattress, at least for a few months?
I can’t be the only person asking this, right?
Comments are closed.
Savings? What are these savings of which you speak?
If the dollar is devalued, even the mattress won’t help. Plus we don’t know how this is going to affect the interest rate derivatives market and the foreign exchange derivatives market. Also too, many countries keep their foreign exchange reserves in dollars.
No, because the US will still be able to honor most of its debts. It will just get exponentially harder the longer the shitshow lasts.
The paradox is, millions of Americans liquidity their financial assets in favor of cash might be the best way to force the Republicans to raise the debt limit. Nothing like a 2000-point drop in the Dow to get those Tea Party gramps and grannies down in The Villages to freak out.
If you’ve sat out the previous crises, my free advice is to sit out this one. Now is the time to have a strategy and to stick to it.
If the dollar collapses, you might as well paper your wall with your savings.
I got some cash yesterday, hid it. Just to have something if we go to a cash economy.
Not considering touching my savings (401K) though, yet. I know people who moved everything into safe savings well into the crash of 2008, then missed the big runup in spring of the next year. Also not buying gold. :-)
@schrodinger’s cat: The only thing we know for sure is that there will be a number of sleazy hedge funds who will make a killing off our nation’s destruction.
Perhaps I should take my meager savings and invest in pitchforks.
It depends on your investment horizon. If it is longer than a couple of years there is no reason to disinvest.
@beltane: as we know from the last meltdown, those winners don’t get paid unless the fed and the government has a plan to pay the loser’s bets for them. Do you see this Congress being able to do that?
No. You may want to make sure you have enough cash to last for a month or two, but all your savings is a bit much. The Fed will still exist as a lender of last resort to the banks, and their cash positions are much stronger than they were in 2008, when they were way over-leveraged, so we’re unlikely to see a bank run. Equities are likely to take a big hit, but they’ll bounce back once the debt ceiling mess is resolved.
If you want to take an aggressive position, try to get a bunch of cash in the bank and buy like crazy after Republican brinksmanship makes the market tank. You’ll be able to make a bundle when the market bounces back on whatever agreement they finally reach. People who entered the market in early 2009 have just about doubled their money since then, and the debt ceiling mess could give you an opportunity almost as good.
@JMG: A 2000 pt drop in the Dow would induce Peter King’s constituents to fit him with a nice pair of concrete shoes and a one-way trip to the bottom of Long Island Sound.
OPEC has priced oil in USD since 1971.
A fall of the dollar would be disastrous on a global level.
You do realize that in Bartertown the midget with the most pig poop calls the shots?
Cash is a luxury of a functioning government.
Barter is the only mode of commerce that will survive through it all.
Bitcoin, bitches. Have some, just in case. At least you can still buy weed with it… which I think will be the currency of choice in California if everything goes tits-up.
Think of the old Soviet Bloc: American cigarettes were the gold-standard currency of choice. If the shit really hits the fan here, currency will be something like that: cigarettes, weed, something relatively scarce and with some intrinsic value– but not a necessity–, and with a demurrage built in (people will smoke enough currency to keep it from inflating).
Noticeably, gold has taken a shit. Wonder why though? Maybe because it has no real intrinsic value.
@Suffern ACE: I can’t see this Congress refusing to do what pleases the CNBC crowd. If the teabaggers somehow manage to lose Maria Baritromo then we will be in new territory indeed.
I’m driving to Seattle from SoCal shortly after the 17th; I truly hope that gas doesn’t spike after any shitstorm and I have to pay $5 or $6 a gallon (estimated price with a mild shitstorm; a serious shitstorm, who the fuck knows?) to get home.
Ahhh, I just got the toenail ad for the first time. WTF? I now welcome the end of days to get that picture out of my head.
Joke is on you if you have your money in the mattress. If the entire system collapeses the money would be worthless. Hahahahahaha. Get your Bartertown gear & mismatched rags together.
If you’re heading into retirement and have a bond-heavy portfolio in your 401k or other investment accounts, you’re going to be especially hurting. But equities are going to get bombed as well as all business spending severely retrenches. It’ll be 2008 all over again, but this time no way to get out of it because then the govt’s ability to borrow money for stimulus will be severely restricted. The only way out will be massive inflation, which will — once again — impact retirees and those on pensions/fixed incomes the most.
It’s going to take all the willpower in my body to not simply spit in the face of the next Republican voter I run into.
Obama has assembled the perfumed bankers who control our financial destiny. Presumably they and their gild will make it clear to what’s left of the GOP that defaulting on our debt is not one of the outcomes that can be permitted. That will be the critical moment.
The Teahadist may continue being crazy, but I suspect that the iron fist of Wall St. will settle the matter.
Why do you think he’s acting like a
unicornreasonable Republican. He knows which side his bread is buttered on, and it doesn’t involve crashing the economy.
@fuckwit: Now, now, gold has some use in electronics as a conductor.
It might be wiser to just go to the liquor store and buy up your favorite brands of liquor. I mean, if you’re going to be broke because of the actions of Congress, at least you can still be social and have your friends over for cocktails.
@Judge Crater: I hope the alleged iron fist of Wall Street can also knock out Koch industries while they’re at it. What’s the point of a global banking conspiracy if it can’t even eliminate the assets of a couple of fascist trust fund babies.
@Judge Crater: We will know who calls the shots in the GOP. If I had to bet, I think the creature is going to eat Frankenstein.
@Geoduck: Also too, jewelry.
@Judge Crater: Yeah, and the tea party added “repeal Dodd Frank” as one of their demands last Saturday because those bankers really want the T Party to self destruct.
I’m not worried about cash; I am worried about the minuscule amount I’ve got in stocks. Probably sell it all here within a week if it looks like the idiots are going to go for the default. I have a hard time believing that they would – but stupid people are always the most dangerous.
Just Some Fuckhead, Thought Leader
Fortunately, I have lived like a grasshopper these last 30 years or so and spent all my money on beer and recreational drugs so I’m pretty much ready for a cataclysm. It must suck for those who have been responsible.
If you’re hellbent on looking for, let us say, alternative currencies that are good under any circumstances, there are three:
Although I might point out in such a world dental and medical care are probably off the table, and therefore you’re not going to live out even five years regardless of how much you prep.
High proof grain alcohol. Portable, shelf-stable, powerful. I think it will be the barter currency of choice in the new economy.
Well, at least we eat tonight. Finally got my first ripe tomatoes from the garden. From seeds to final fruition, it only took six months!
What a freaky growing season it’s been.
Just Some Fuckhead, Thought Leader
On a serious note, DougJ, yesterday on NPR I heard an expert talking about how the rationality of the market prevented a stock drop yesterday. He said that because investors and traders couldn’t link yesterday’s government shutdown with some kind of feared existential threat like the Mayan Apocalypse or Armageddon (both presumably behind us) they didn’t panic like they may have a year or so ago.
I think that sort of clear-eyed rationality may help us when we go over the next cliff.
If the Dollar crashes not even the mattresses will help you keep your wealth.
It actually crossed my mind to max out my line of credit. But I’m sure the banksters would find a way to cheat me out of it anyway.
@Geoduck: A lot. Without gold all this internet shit, for example, stops cold.
Cost of production per ounce is still about $400 to 500 per ounce. It’s grossly overvalued and as soon as the Kenyan Menace is out of office, that bubble is going to pop and a lot of morons will lose a shitload of money. And it couldn’t happen to a more deserving bunch of people.
@Suffern ACE: They added a lot of crap. But the financial community knows how to add and subtract. Defaulting on our debt is a black hole that our plutocracy will avoid at all cost. The Tea Party, as schrodinger’s cat said, may escape the lab and wreck the village, but I think they will be neutered before that happens.
According to the liberal Rasmussen polling firm, the President’s approval rating has jumped since the start of the shutdown: http://www.dailykos.com/story/2013/10/02/1243346/-Rasmussen-Obama-approval-rating-jumps
I would imagine that if the Republicans impeach him for the crime of saving this country from default, his numbers would climb into the mid-sixties.
The government covers $250K of your money in a bank account. If the government can’t actually cover that, then the dollar is no longer backed by the government, and your little pieces of paper won’t even be worth coloring on.
@Judge Crater: @Just Some Fuckhead, Thought Leader: I love that quote attributed to footballer George Best: “I spent most of my money on booze and women…and the rest I just wasted.”
Savings? My savings is about to be eaten by my not getting a paycheck. I still have to buy gas to drive to my non-paying job, and pay my mortgage, insurance, gas bill, electrical bill, water bill, student loans, and car note. I wonder if they’ll accept a screenshot of the pay system saying I’m in a non-pay status due to budgetary constraints?
Of course, if the economy collapses, will it really matter?
@Cacti: The dollar collapsed 40%, but that was 2003-2007.
If US bonds sell at a deep discount due to fear of default, I’m buying. It is just like Pascal’s wager.
If the US dollar really does go to hell, then any asset will be valueless, including cash.
If the dollar does NOT go to hell, might as well make a profit on other peoples’ worry.
it it time to sock all of our savings under a mattress, at least for a few months?
Short answer: No. Long answer: the Federal government, whatever (unlikely) oops occur, will do debt service on T-Bills. So as long as you don’t sell your T-bills in a panic, things will be fine. This effectively applies to stocks as well – if you’re in the market, and you haven’t been churning shares, just leave it alone. The worst time to sell is in an actual panic, and the second worst time is to join the stampede.
In any event, the Federal reserve is going to make good on everything, and they have the power to do so. (Last debt ceiling crisis, the WaPo mentioned an old lady who unloaded her T-Bills from her portfolio right before the debt ceiling deadline, and she got to take a bath, because a few days later, it was all sorted out. So she lost money selling, and if she bought them back later, which she almost certainly did, the net was a loss, even though nothing happened.)
It is faintly possible some foreign capital may decide to temporarily vacate for other climes. Perhaps they wish to invest in lottery tickets from Hong Kong. That would cause the dollar to fall relative to whatever currency is being bought. That’s great! More exports for us!
The special case is if the government collapses or something like that: since not enough people want the government to collapse, it’s not going to happen, but if we assume that it somehow did, putting dollar bills in your mattress won’t help. Any event (nuclear war? zombies? a super horrific version of the Black Pague?) that causes the dollar to become worthless paper is an event in which the kind of paper you have your savings in is irrelevant, and also an event in which you’ll be too busy to worry about old age.
Don’t bother. Follow the advice of the Hitchhiker’s Guide: don’t panic. And always know where your towel is.
None of this really matters: in any situation in which Obama is forced to break the law to continue to do debt service is a situation in which Obama is going to break the law (because he isn’t a fool) and everyone but the House GOP will forgive him for it. They can’t stop him from breaking the law to continue debt service in any relevant time frame.
I want to invest in a derivative based on GOP stupidity. It seems to me to be a sure-fire, can’t lose proposition.
@Judge Crater: “But the financial community knows how to add and subtract.” Funny.
It’s the gazillionfucking dollarines that the top 1% possess while the rest of us suck moldy bread.
As Roger Moore, remarked, doomsday scenarios are unrealistic. The U.S. government will not disintegrate, other countries will not stop accepting the dollar as the de facto global reserve currency, China will not call in all their debts (and in any case China only holds 1.2 trillion of the total 14.3 trillion dollars of currently outstanding U.S. debt, or roughly 8% of total U.S. debt. The single largest holder of U.S. debt is the American people, with 54% of currently outstanding U.S. debt. Foreign nations hold 46% of U.S. debt. Japan and the UK are the next largest holders of U.S. debt, with 912 billion and 347 billion respectively).
It is absurdly unlikely that the U.S. dollar would be devalued relative to other currencies as a result of a temporary default. First, the U.S. government can always issue IOUs on which it promises to pay interest during the time of the default crisis. Unless every other country in the world believes that the U.S. will simply repudiate all its debts permanently and never pay them, the only issue during a default crisis is “How long will it last?”
Second, the current Treasury Secretary, Jack Lew, has made it clear that the Obama administration will not negotiate in order to resolve a default. Obama has apparently learned his lesson from his ill-advised negotiations during the debt limit crisis in 2011, and now intends to stop this kind of Republican hostage-taking permanently. This means that if we go into default, either Obama will use 14th amendment authority to pay the debts, or he’ll mint a platinum coin, or the Republicans will have to capitulate. Whatever happens, it’s not likely to be a long-drawn-out process because the longer it goes on, the greater the pressure from the Republican base to resolve the situation.
Third, the Dow and the S&P 500 and the Wilshire 500 stock market indices may drop dramatically during a default, but this typically has little long-term impact on the economy as a whole. As an example, consider the 1987 stock market collapse. It was dramatic but had very little impact on the economy as a whole.
The most likely outcome of a default? The final collapse of the Tea Party as a viable political entity, and the subsequent election of a significant Democratic majority in the next House election. Current polling shows that the public blames the Republicans overwhelmingly more than the Democrats for the government shutdown and the same presumably goes for a default, if that happens.
We can say several things will certainty about devaluation of the dollar. China will certainly not devalue the dollar against the Yuan, since China keeps the Yuan at an artificially low level relative to the dollar in order to adjust the balance of trade. Other countries are equally unlikely to devalue the dollar relative to their currencies because even if the U.S. goes into temporary default, it’s still a far more reliable economy than, say, the Eurozone (some of whose member nations are already in default), or Brazil, or India, etc.
third of two
Mattresses are for “sleeping” on; buy a decent safe. (Speaking to those people who lack the foresight to stash their cash overseas.)
@LanceThruster: If Enron can market weather derivatives, I don’t see why not. We can create them here at Balloon Juice, and call them Tunch Derivatives, fear the mighty paw.
Don’t you worry ’bout a thing there, DougJ…just toss me the keys to your portfolio and I’ll run rings ’round all them a-holes! I’ll even throw in a few doughnuts on some of yer hated wingnuts’ lawns to boot. Heh.
@max: I don’t think he’ll have to break the law. He might have to do something really unusual, like go the platinum-coin route, but I think he does have some legal options. Agree that if he did actually have to break the law to save the economy, the House’s impeachment would be pretty toothless.
I keep some cash in a desk-installed lockbox for just such an emergency. I’m also within about 6 easily traversed miles to a bunch of wealthy GOP oriented families, and have decent firearms. ;D
@jonas: “If you’re heading into retirement and have a bond-heavy portfolio in your 401k or other investment accounts, ”
I just read someone who says that you should consider any SS coming to you as the equivalent
of a bond investment. So, for most people, their bond portion of any investments is already taken care of, and should use (much more of) the rest of their investments in non-bonds.
This is also a sensible and almost certainly correct prediction.
Bottom line? The ‘default doomsday scenarios’ are another Y2K scare. Pay no attention. It’s not an issue.
If you want to worry about something, Doug, worry about what happens when the Department of Homeland Security budgets surpasses the Pentagon budget — which it’s on track to do, at currently growth rates in the DHS budget, in about another 15 years.
Or worry about what happens the President orders `targeted killings’ of American citizens on the streets of America.
Or worry about what happens when the rule of law becomes so eroded in America that citizens are pulled out of their work cubicles and dragged into unmarked vans with black hoods over the heads by guys wearing riot armor and carrying M-16s, and no one blinks an eye. (Compare with Argentina’s “Dirty War” and the desparacidos.)
Or worry about what happens if some southern states decide to stop paying taxes to the Federal government.
Those are all more realistic and more likely scenarios, with precedents in today’s headlines, than far-fetched economic doomsday scenarios bruited about by fringe websites like Clusterfuck Nation or The Oil Drum.
Yet another fine thread title. Once Upon a Mattress was the first Broadway musical I ever saw (saw actually on Broadway, I mean — I saw plenty of musical theatre in my own town growing up). In 1959, starring a young Carol Burnett.
Just out of idle curiosity, is there anything concrete and specific that you can point to that leads you to believe either (1) that your bank accounts are at risk or (2) in the event of something unforseen, the FDIC won’t be good for it?
The fundamental question you need to ask of anyone who is predicting calamity in the event that the debt ceiling isn’t raised in a timely manner is “well, if that happens, what safer alternatives exist for everybody who is trying to get out of dollar-denominated investments?” I suspect that the most common answer to that question will be something on the order of “umm … well… sumpinsumpin.”
@gelfling545: Well, I’ve currently got $0.19 in my savings account…
I don’t think Obama is the core reason gold is overvalued. Gold started seeing double digit gains back in 2005, with continued double digit growth every year since then except 2008 and 2012. And gold has tanked significantly this year, off more than 20% since January and off more than 27% since a year ago. So Obama didn’t get the run-up in gold started, and it seems to be dying while he’s still in office.
Oh Doug…..don’t you know that Saint Glenn (Beck) tells us we should buy gold and then I guess stash that under our mattress.
The Sheriff's A Ni-
@burnspbesq: Responding to cries of DOOOOOOOOOOOOM with rational explanations will not get you blog hits, you know.
Higgs Boson's Mate
If the US should go into default on top of the shutdown I think that it would be a fine time for my state, CA, to “divorce” itself from the government. Who wants to stay with a deadbeat that doesn’t go to work yet still demands a sizable chunk of your money so that it can blow people up and spy on you?
@Just Some Fuckhead, Thought Leader: This,
@SiubhanDuinne: I remember seeing the Carol Burnett version on TV. Always loved that lady. I think there was a more recent remake that cast her as the queen (in the original she was the alleged princess).
On topic, I see the Prez has summoned congressional leaders for a chat this afternoon. Boehner immediately issued a statement calling it a sign of surrender. We’ll see how that works for him.
@catclub: Some financial advisors treat SS as earnings from fictional net assets in order to compare SS income with savings income– but this is just an accounting trick. The reason you want to have both bonds and equities is that a diverse portfolio is more likely to ‘self-hedge’ than either bonds alone or equities alone. You won’t hit any jackpots with a diversified portfolio, but you won’t suddenly lose half your savings either.
Seriously the honest answer is we don’t know what will happen if there is a default. I think Obama will avoid that eventuality, as to how he will do that, I have no idea.
I already took precautions. I moved my 401(k) dollars out of stocks and parked it in a money market (within the 401(k)). I was figuring after an overly good year of stock prices rising, and the idiocy coming up, that there would probably be a selloff or a big dip. So I’m going to wait it out. If I’m wrong, I missed out on a few gains in the short term. If I’m right, I’ll buy back into stocks at lower prices.
Most of the funds I was in had a 1-2 month waiting period before I can buy back into them, but the timing should still work out.
Who (outside the GOP) would be stupid enough to write such a thing?
If you’re going to do it, follow the example set by Goldman Sachs when it bought credit default swaps from AIG. Get collateral. Lots of collateral.
I like it!
I think it’s either an “attributed to” quote or one guy paraphrasing another, since I’ve seen Tug McGraw quoted saying about the same thing.
Or I could just make sure to privatize earnings and socialize losses. Isn’t that the way the MOTU do it?
@Botsplainer: “I keep some cash in a desk-installed lockbox for just such an emergency.” Which room in your house? ;)
I hope the room has Nomex wallpaper.
@mclaren: That was relatively sane, except I’d disagree with this:
You fight when the ground is favorable to you and when you have a high likelihood of killing or permanently disabling your opponent. The 2011 debt ceiling fight was after Obama was weakened by the 2010 election and the 2012 election was looming with a chance of the GOP getting control of both the legislative and executive branches. The Bush tax cuts were about to expire. In the end, he got the GOP to go for a sequester that shielded a lot of entitlement programs and a tax deal that back-doored more progressivity into the tax code, which was a pretty successful tactical move that eventually frustrated the hotheads in the GOP and possibly led to some of their alcohol-fueled intensity in the current confrontation.
This time, the ground is much more favorable to Obama. The Senate Dem caucus looks to be solid, probably because they’re pissed at the House for holding them hostage again. Mitch McConnell has been neutralized. He and Boehner have to ride this out and hope the teatards get discredited enough to regain control of their respective caucuses.
You are right about the tea party being in the killing zone, but there is a strong case for saying Obama (and Harry Reid) maneuvered them there.
Via TPM, Rand Paul ups the ante on the “stupidest thing said by a Republican this week” contest, tweeting
It’s an impressive effort, but it is still only Wednesday so plenty of time yet for a new challenger.
Higgs Boson's Mate
One thing that you can be sure of no matter what happens with the debt ceiling; if you’re not in the 1% the outcome will be heads they win, tails you lose.
@burnspbesq: “If you’re going to do it, follow the example set by Goldman Sachs when it bought credit default swaps from AIG. Get collateral. Lots of collateral”
And for GS, the collateral was Paulson and the Treasury paying GS in full on its worthless securities when AIG collapsed. Worked for them.
If the dollar crashes, not even the mattress will – what? HOW many?
Geez, I really need to start reading the comments before I sling out my wit.
Cash and insured bank deposits are king, since the Fed can’t run out of money. Unless default lasts long enough to cause bank failures, but the system is awash in reserves, and the Fed has practiced turning non Treasury securities into reserves for so long, it has that on lock-down.
The Fed started thinking about how to substitute other securities for Treasuries in the repo market in 2011.
The Fed has even been experimenting with test trades with dealers to get some understanding of how repo market will act.
If things get so bad that there are bank failures, then what the heck, you would be a survivalist and have your kit of gold guns ammo food and water read to go in that case.
Interest rates will rise according to length and extent of payment suspensions and perceived risk of a real default. Foreign exchange value of dollar will fall likewise, would not be such a bad thing.
Me, I follow Cole’s advice: goats and generators, in addition to gold, guns ammo booze,food and water. Gonna stuff all that in the mattress this evening.
How has greater wingnuttia responded to the Gubmint shutdown? Anyone know? I don’t have intestinal fortitude to wade into those swamps. The false equivalence of the MSM is about my limit for self inflicted misery.
@The Sheriff’s A Ni-:
Not my blog, ergo, not my problem.
You mean you HAVEN’T been doing this for at least the past 5 years?
I make it standard practice to keep at least 10 large (in twenties) hidden away for Just In Case.
And, as of 10/01/2013, it’s Just In Case.
One has always got to have some “walking around money” squirreled away.
My father in law is grumbling about converting his savings to gold and burying it under his house in case of Armageddon. He lives at the beach so there are many flavors of Armageddon that would make his gold difficult to reach. But he told me not to worry about it…..
@dmsilev: So, the Paul policy is “Increase funding for jack-booted thugs.” I sense something contradictory there.
@Roger Moore: I prefer: “I spent a fortune on booze, fast cars, and fast women, the rest I wasted.”
@beltane: Ding Ding Ding – Obama has a plan to avoid default, he just can’t broadcast it! AND as always, the teaparty/idiot brigade has been very very good for electing Democrats. Just calm down and let the wave come. I do suggest a hunting dog though just in case
The key to making money is to figure out what everyone is afraid of and bet against it. Reality is almost always better than what the collective fears.
Yeah. And I work with some.
Must… control… Fist… of Death…
@Roger Moore: Gold is world market, and no politician can swing just be being one individual rather than another. the mine exploration and Investment cycle has a huge impact on swings in gold prices. i know some people who work in it, and one big factor of evaluation of a prospect is whether it can pay off during current investment cycle, or should wait for the nest one.
You ever get gold fever, talk to a someone who works in some way on digging the junk out of the ground, he or she will talk you down to earth.
This looks like the perfect time to start a new wingnut meme: OBUMMER WANTS THE REPUBLICANS TO MAKE HIM DO IT.
Think about it, sheeple! As soon as there is a default, the idiot masses will plead, nay, beg Obama to break Federal Law to raise the debt ceiling. He will do it, and the idiot masses will rejoice and believe they are saved. And then the gloves are off! Every FEMA camp, every Sharia court, Obama can break the law again and again and say it is for the good of the people, and they will eat it up! Then he will become what he always wanted to be!
DICTATORSHIP! KENYANISM! ISLAMAGHAZI!
Hey, it could happen.
I won second place in the Steak Raffle!!!!~!
The Brothers of Alpha Sigma Phi Beta Gamma Chapter would like to thank everyone who participated in our fund raiser and announce the winners of the Omaha Steak Raffle.
I second Roger Moore and max. Diversify and don’t panic. And if the markets go to shit and you have a few extra clams sitting around doing nothing, see if you can pick up a few blue-chip-type shares while they’re languishing at the bottom of the tank. And then just sit tight and wait for the ship to gradually right itself.
@raven: Congratulations! When is the party and are we invited?
“How has greater wingnuttia responded to the Gubmint shutdown? Anyone know?”
I a glance at Free Republic this morning, and there were no less than seven posts/articles about the closed WWll memorial. Two about the death of Tom Clancy. And one with the title ‘Glitches with Obamacare website. Reasons unclear.”
Ball juice concern troll Doug is concerned.
Congratulations! When’s supper?
I am not prone to gold fever, but I feel moderately comfortable trying to fleece people who do. I’m waiting for gold to crash so I can buy some to sell to rubes at the top of the next cycle.
@Ash Can: I think I told John to donate it to someone who needed it. I think?
California is going to beat back the GOP all by itself.
We’ve got 1/9th the US population and our GDP is about the same as the Confederacy save Texas. We will fucking win this thing all by ourselves if need be.
@jl: You use Cole as an adviser? Jesus.
Is that better than winning second prize in a beauty contest?
@shelly: No offense to any WWII vets but the WWII memorial DC is kind of aesthetically unappealing, compared to the other memorials on the mall. I haven’t seen the Martin Luther King or the FDR memorial.
There are definitely times when I’m proud of my adopted state. The past year has been a whole string of them.
@Just Some Fuckhead, Thought Leader:
My father died shortly before the last crash and, knowing how frugal he was, I put all of the money (not a whole lot) into my 401K just in time to see 50% of it blow up. I was pissed off for both myself and my dad. I would have been better off spending it all on a used car.
I’ve been thinking all week that I should get my money out of bonds for a while but, like almost everyone else, I have no idea what the best move is right now.
@Roger Moore: One woman in the biz I know says US environmental regs are keeping the the US from flooding the world gold market. If you don’t care how many animals you kill or aquifers or water basins you wreck, there are a lot places we could pile up huge piles of low grade ore and leach tons of gold out of the southwest desert.
They tell me gold is funny, no one knows any reliable way of looking for deposits. But there are a lot deposits lying around waiting to be turned into reserves when the time is right or the technology is developed.
Gold is a loser. Been substituted out of almost all industrial uses, not really true the the supply is limited any more.
Teabaggers will pee themselves with joy, or rage, when they learn that the most important developments in gold mining over last 40 years came out of dinky little experimental projects at the U.S. Bureau of Mines.
Was that a good government project, a boon to mankind, run by St Ronnie, or was it a Satanic plot to debauch the value gold (the only ‘real money”) when Obama and the Clintons climbed into their time machine and gave the idea to Carter.
Who will ever know? Maybe the teabaggers know.
” You use Cole as an adviser? Jesus. ”
I emulate Cole in all things.
I was going to get me some flesh eating beetles too.
Laugh at me now, but when I’m the top dog on the hill when the shit comes down, I would appreciate a nice polite smile. Or, into the beetle pit for you!
@jl: I gave the beetles away, their work is done here. And if the weather is decent I’ll have some more giant fishes when I go to the Destin Fishing Rodeo this weekend!
@zmullls: Same here. Heading into retirement and don’t need to risk right now. Locked in some profits and will ride out the storm. I did the same thing in dot.com boom/bust, and housing bubble/bust — may have missed a small amount of recovery, but not much. Market timing is usually a fool’s errand, but when crises are sending clear signals, a little safe harbor is very reassuring.
Bought $1,500 worth of gold mutual funds just before the 22% market crash of the 80’s. It went down to damn near nothing. Was up to close to 40 grand not long ago. Probably in the low to mid 30’s now. Who knows or cares?
I never understood the gold thing. The only thing that ever almost made it make sense was that special they had on the History channel where the aliens come down and modify monkeys to turn into men to mine gold for them. Maybe we just have that bullshit written in to our programs. That makes as much sense to me as anything else I have ever heard.
Anything is possible I guess :-)
I never figured why it was believed that when the levee breaks everybody is for some unknown reason gonna want cool looking teeth or a bracelet.
Should have typed:
” They tell me gold is funny, no one knows any reliable way of looking for deposits. But there are a lot KNOWN deposits lying around waiting to be turned into reserves when the time is right or the technology is developed. ”
Too much potential supply, almost no practical uses for it. I guess its really pretty and doesn’t rust, won’t turn your skin green, that’s about it.
Just what are these savings things you talk of?
Honestly, with the gerry-mandered districts these clowns come from and the “purity through suffering” philosophy they operate under, is there any conceivable fallout for the Tea Party, even if they crash the economy? The faithful are demonstrably immune to objective reality. They routinely demonize, protest and vote against things most of them (statistically speaking) rely on: Medicare, FDA, EPA, FDIC, SEC, SSI, SSDI, SNAP, etc.
Why would this be different?
Maybe they send a different clown to Washington at the next election, but it seems likely they’ll still be sending a clown.
@different-church-lady: Memo to self: at least read the first comment of the thread, if no other.
Higgs Boson's Mate
Real Placer County Miner: That’s Leaverite, boy.
RPC Miner: Yep. That ain’t gold so leave ‘er right where you found her.
@raven: Isn’t second prize a set of steak knives?
Higgs Boson's Mate
@jl: The biggest immediate use of gold right now is as a plot for reality TV shows. Also the biggest immediate use of rednecks.
@roc: You should see the idiots set up to run for Paul Broun’s seat here!
should be time for the big reds in the surf. i plan on giving a whirl this and next week on the barrier isles…
@tybee: Yea, it may be a bit early in the gulf, I caught the big ass red in November last year. There is a special Red Snapper season for 2 week so that’s what prompted this trip. The forecast sucks so I’ll just have to play it by ear.
@tybee:Check out this dude.
Christ, now I have to get a mattress?
Let’s see…You are a gun-hatin’ lefty, right?
So yeah, liquidate your accounts and stash it at home.
Oh and BTW, there is this book on Amazon about surviving the debt limit crisis. Great read. I’ll send you a copy. What’s your address?
@flukebucket: Gold appeals to people who don’t understand money (largely because they don’t try). They’ve a romanticized notion of economics based on truthy-sounding aphorisms about tangible and concrete things, never mind actual human history, and gold-as-currency sounds like one of those things.
From there they’re just preyed upon by grifters. There’s no actual thought or theory behind it. Just a vague notion that’s being exploited for profit. Does anyone think we’d be hearing about the gold standard or gold as your personal hedge against hyperinflation if charlatans couldn’t sell Krugerrands and commodity options to unsophisticated buyers?
Mike in NC
More than one prominent architect called it a “Stalinist monstrosity” when it was finished. It was basically the botched result of a committee that kept changing the design. My dad and my wife’s dad were WWII vets who didn’t live to see it open. We visited it one day and were tremendously underwhelmed by its almost total lack of coherence.
Heh. I see we think alike. A real gold crash will take a few years to recover from, like the decades the last one took but patience is a virtue. I spent 1994-2002 as an at-home position trader (NOT a day trader) and did really well, until the stress got to me. I am proud to say that I got everyone in my family out of stocks in January of 2000 and shorted the hell out of it (with options) after that. Watching gold fever grow over this cycle has been remarkably textbook as far as trading and market cycles go.
My own “gold peak” signal was this summer when a winger I know was desperate for me to explain how to buy gold coins to him. I did everything I could to dissuade him, telling him he was buying at the peak, not to buy locally (due to the high bid/asks spread), that the cycle was peaking, etc. But no, he had to buy locally (can’t trust Fed Ex), he had to have something to hold in his hand, and mostly that he had to own something that he “could buy food with when society collapses or Iran drops the bomb”. Yes, really. I just laughed; if society collapses or someone drops the bomb, please drop it directly on me so I don’t have to spend a few weeks dying of radiation poisoning or living out Mad Max scenarios. The source of his rampant paranoia was some winger/prepper novel.
@Mike in NC: And then St Ronnie totally fucked up the dedication by dying!
I went there when I buried a buddy in Arlington and I didn’t really care one way or the other about how it looked. I liked the little reliefs of various scenes and someone left a fake leg near the Corregidor part and, since my dad was in that op, it was kind of cool.
Stephen Colbert has already declared himself Ur-Lord of the Afterscape. So I’ll be following him around like Channing Tatum following Danny McBride.
@StringOnAStick: Future troughs in gold prices may be longer, since the shut down price for modern leach pit mines are lower than with older methods. You gotta have people hang around to process the waste and secure the area, might as well collect the leach solution with the gold and pick up a few bucks while that is going on.
@CambridgeChuck: Agreed; wise move.
Unsophisticated is rather charitable. “Hey, Fiat Money is collapsing! Your dollars will be worthless and only gold will be worth something! Therefore I want to exchange my precious gold for your soon-to-be-worthless dollars!”
It makes me feel so good to hear somebody else say this. Around here I am always looked at like I am from another world when I try to explain to people that the infatuation with gold has never made one damn lick of sense to me. I just don’t get it and I never have.
As far as understanding money, does anybody have any really good books they would recommend to help a guy educate himself? Money fascinates me. I know I will never have very much of it and I honestly don’t care about that. I would just like to understand how the concept came into being.
@fuckwit: I would advise strongly against that.
I’m thinking about Goucho and Chico. Groucho saved money and invested in the stock market while Chico blew through every dollar he ever earned, spending most of it on booze, cards, and showgirls. After the 1929 crash Groucho was as broke as Chico, who asked him who had spent his money more wisely.
@bobbo: It crossed my mind to write a letter to all my creditors and tell them if this shit isn’t all sorted out by the end of the month, they will not see another dime from me.
A mass movement like that could wake up the MOTUs and get them to push their minions to do something sensible on the Hill.
@jl: I agree, it is going to be a long, long time due to that aspect of actual mining operations and also because owning gold penetrated into a much wider audience of rubes (therefore fewer un-stung rubes to sell to next time).
I grew up around open pit leach mines (dad’s a mining engineer). The amount of sunk costs in any mine and associated facilities is high and the payoff is calculated over decades or for as long as you can forestall going into permanent closure status, whichever comes last. As long as you are still “actively” recovering product, that big final cost of permanent closure gets pushed off down the road. Most mining companies will let a site sputter along for years as barely active just to avoid that legal change over into “final closure”.
Man, almost worth it to get back into debt, just to jump aboard a roaring train like THAT one.
@Hungry Joe: “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.” – George Best
@StringOnAStick: Yes, that is what people who know the business tell me. Some were worried that this cycle would sputter out too quick, they were hoping the gold fever would get them through until they decided to retire. Could have moved on to mining something else, but that would be a pain. They told me that after this one bust, the trough would be very low and very long, just too much online supply with very low shut down cost out there already
Interesting things is that the people in the gold business know that a lot of their product goes to swindlers who cheat dupes. One of them told me, well at least the vast majority of it goes to places in like China and India and families living in sketchy countries where there actually is a good reason to have some stuffed in your mattress.
Edit: I was at dinner once with some mining engineers and I asked what the real fundamental value of gold was, what the industrial uses were, and they all answered Nothing, and Nothing of any significance.
@flukebucket: Well, I think it is hard to find a book on money that doesn’t have a lot of political bias built in, especially with the dominance of the Chicago School on all things economic/academic these days. However, going one layer out into the concept of what people do with money, specifically how they invest with it, you’d likely find Manias, Panics, and Crashes by Kindleberger interesting and easy to find.
I found that book helped me de-couple the concept of money as a thing (remember your childhood wonder at that first shiny coin?), into what money really is: a mutually agreed upon means for conducting transactions. It is hard for most of us who live with the problem of insufficient money to be able to step back far enough to see it as just this thing, and not the actual goods or security we buy with it.
nice feesh. a few years ago, when the youngest was about 10, he caught a red almost as big as he was. it, well, she as it was female, was longer than a 120qt cooler.
she, hopefully, still swims in front of beach hammock creating more reds for future dinners…
Well, I don’t know about advice, but in terms of prognostications, Dean Baker called the dot com bubble quite a long time before it peaked, and called the housing bubble years before it peaked.
Though the record on the housing bubble (in terms of who got there first) is clearly held by a British Georgist, who predicted it about 17 years in advance.
Thank you. If I can get that for my Kindle I will get it tonight.
CA is fubar’ed until they get rid of Prop 13.
Forget “coming into being”; how about understanding how money actually works?
Seems like most people, from conventional economists to all these right-wing “the Fed is debasing the money supply !!eleventy!” people don’t.
The description that seems most plausible to me is “monetary realism”. It’s similar to Modern Monetary Theory, but AFAICT simpler and more likely to correctly reflect reality.
I’m currently shorting the DIJ, but given my track history, it’s probably time to by growth stocks. :-\
I don’t have time to skim the comments, but I’m still going to assume somebody already said this: this is a fucktastically hugely stupid post. If you’re serious, it’s about as irresponsible as can be. Bank runs begin when people are scared there will be bank runs. And if you put up the post just to churn the comments, well, that’s about as stupid as the right wing gets.
When things finally go sideways, I will start my second-act career as a warlord and change my name to Lord Humongous. You can join my roving gangs by uttering the password “both sides do it.” I promise they won’t kill you and take your whiskey.
@fuckwit: So if an actual solid metal beloved by paulites everywhere has no intrinsic value, what does that make a Bitcoin?
And if everything goes to shit, good luck finding an Internet to trade your Bitcoins on.
” The description that seems most plausible to me is “monetary realism”. It’s similar to Modern Monetary Theory, ”
There is something that I think could be called a ‘monetary realism’ school, that focuses on actual banking and credit operations to make payments and finance projects. IIRC comes down through Bagehot, Young, Hawtrey and Minsky.
Modern Monetary theory lays a bunch of theoretical speculation on top to recommend certain macroeconomic management policies (like nominal GDP targeting)
So, is that what you’re talking about?
@mclaren: Christ. Stop huffing paint thinner.
If you’re a carnivore, you might want to shop now, buy what you eat for a month and freeze it. That’s because meat inspections have been halted. Go to the store today, and what you buy should be OK. But two weeks from now, after the meat-packers realize that no one is looking? Hmm…
I sold every stock I own on Monday. Most financial (what’s the plural for crisis) have been man made but people were working to solve it. This is the first one where people are intentionally causing it.
It’s going to get bad.
They can service the debt but nothing else. When you fail to pay a single creditor because you don’t have the money, you’re bankrupt. A creditor bankruptcy automatically triggers all kinds of problems for the buyers or U.S. debt. The US government also rolls over debt all the time (pays off note without new notes). No debt ceiling, no new notes. If they cannot pay the principal on the exprining debt without printing money, it’s kind of a big deal.