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Thread: Rust Never Sleeps - The Economy again...

  1. #1

    Rust Never Sleeps - The Economy again...

    I can't vouch for the accuracy of this, but I do consider the information in it important enough to share, and discuss.

    If Raoul Pal was some doomsday spouting windbag, writing in all caps, arbitrarily pasting together disparate charts to create 200 page slideshows, it would be easy to ignore him. He isn't. The founder of Global Macro Investor "previously co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe... Raoul Pal retired from managing client money in 2004 at the age of 36 and now lives on the Valencian coast of Spain, from where he writes." It is his writing we are concerned about, and specifically his latest presentation, which is, for lack of a better word, the most disturbing and scary forecast of the future of the world we have ever seen....


    http://www.scribd.com/fullscreen/954...iiyjtzns9qcorz
    Andrew Macpherson

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  2. #2
    Z8 Guru 2112's Avatar
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    Ugh,

    What can a small time guy do?
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  3. #3
    I have no idea, thats why I posted it here, to see if we can find some voices amongst us that can help us navigate what really appears to be a perfect storm.
    Andrew Macpherson

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  4. #4
    Z8 Guru 2112's Avatar
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    BTW, That is the first time I have seen China getting called out.

    So many others talk about how they are so flush and own all the debt (which ironically will be defaulted on).

    I mean, I can't buy enough gold to live on for long, and I still have a mortgage. Am I hosed?
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  5. #5
    Z8Mania
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    IMHO- all anyone can do is be as best prepared as we can on an individual basis; so:

    Make sure your personal balance sheet and income statements are as clean as possible
    Reduce debt
    If you like gold or other commodities hold them

    My own take on the gold question is if Armageddon happens, gold will be of as much use as dollars. So it could be a hedge. On the positive side are all the usual arguments about gold. On the negative side gold has little intrinsic value and we've become very accustomed to dealing in dollars. Will everyone just give up their dollars? My own take is you're better off buying a 4WD vehicle, spare wheels and tires and guns and ammo than gold. If it gets that bad money of any kind won't matter much. If it really gets that bad.

    I hope this fellow is wrong but thank you Andrew for sharing.

  6. #6
    Team Z8
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    I read that yesterday Andrew. I like many here, are more than a little concerned. Has it occurred to anyone why not one of the Wall Street crowd including Corzine has been prosecuted. I know the assumption is that they're all corrupt but perhaps in addition their prosecution would expose the entire system as a complete house of cards. I fear one day soon a commercial or sovereign entity will respond in a way, to protect their own interests, that will awake the masses creating a level of mistrust that will doom the current fiat global currency system.
    I have to the best of my ability: Gotten rid of debt
    Lowered my cost of living
    Increased my holdings of physical assets and precious metals
    Continued working when I otherwise might have retired

    I really wish you all the best. This really is a special group!
    Andrew, perhaps we should consider a Z8 economic summit and all meet to share ideas? By the way, did you see that the BIS is considering making Gold a Tier 1 asset?

  7. #7
    Yes, I'd love it if we could help each other navigate all this, as I think community and communication will be key. I also agree that as the corruption becomes more clear and people understand that Dem Inc & Rep Inc are fully funded tools of the banking system who offer the illusion of freedom while we live in a financial faschist dictatorship that is quickly stealing our rights and freedoms, there is going to be civil war. Why did Homeland Security just buy 450 million rounds of hollow point bullets? They, the banking mafia, can see what's coming, and they aren't going down quietly.
    Andrew Macpherson

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  8. #8
    Team Z8 ZMates's Avatar
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    My personal recommendation is to keep things in perspective. '08/'09 was the worst credit crisis ever. The world didn't fall apart, though, did it? Global GDP nudged down a bit http://www.google.com/publicdata/exp...n&q=global+gdp for the first time at least since 1970 and quickly recovered. The one predictable thing about markets is that there is excess volatility in asset prices compared to the cash flows produced by assets. So when the market panic does come and I think there is a good chance we'll have another volatile summer, keep your head about you and go long when everyone else is getting out. I have my long term investments that I'm very comfortable with through thick and thin. My play money is in cash at the moment, though.
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  9. #9
    Z8Mania
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    My take is more pretty much in between the two view points above (a- we're on the edge of the worst cliff ever; b- its not going to be Armageddon!).

    IMHO- the perspective ZMates brings is appropriate; but---- IT COULD get a lot worse. What we have to fear is simply fear itself. In this case fear takes the form of a true run on the banks. In some ways, our system, and all systems are houses of cards. Any banking system, if every account holder wanted to pull out every monetary unit they held all at once, it would crash that system. Now, ZMates, I have been told by people who I know and believe and who I believe have access to enough information that I take it seriously, that the USA was in fact 24 hours away from a total banking system collapse. What would have happened then? It really could have been that bad. But, it didn't happen because we acted to stop it. The question I have is- do we have the will do act again if it gets that bad? I don't know. I really don't.

    Skicoach, I do believe some people have been prosecuted but in general, our system doesn't classify the activities most of those I think you're referring to as criminal. Maybe we should change that. I don't know on that either. My opinion is we want to encourage risk taking but we also need better ground rules. I think for too long we've cobbled the rules together from the prior rules, all of which, not surprisingly are the result of a semi-corrupt process. And over time the results compound and thus you have what you have.

  10. #10
    Team Z8 ZMates's Avatar
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    A couple quick comments:

    1) deposits just aren't that important anymore as a source of liquidity.
    2) there was a bank run in 08/09. Private liquidity flows stopped entirely and any liquidity that could be called was. However, the central bank stepped in--as it should have done as lender of last resort--and made up for the lack of private liquidity sources.
    3) financial services firms' balance sheets were severely liquidity stress tested in 08/09 and the skeletons are out of the closet. A second liquidity stress so soon after the last one won't be nearly as bad.
    4) the problem that banks face right now is a capital shortage (as opposed to a liquidity shortage or "bank run"). The lack of capital restricts the ability of banks to take risk, which is a necessary function to keep the capital flowing and the economy properly lubricated. However, even if banks stop lending entirely the world won't cease to function. There was very little lending going on in 08/09 and the world didn't stop. Firms in the meantime have been stockpiling cash so again the next time around won' be as bad.

    Anyway, just saying things can get tough and very well might. Asset prices could fall dramatically. But, life and the economy will go on.
    Silver/black
    Dinan S2 package: headers, throttle bodies, oversized MAFs, airfilters, anti-roll bars, lightweight flywheel
    Dinan by Brembo brake kit and monoball control arm bushings
    BBS forged individual wheels
    Quaife differential, 3.64:1 final drive
    Meisterschaft GT titanium mufflers
    K&W 3 way adjustable competition monotube dampers and monoball adjustable mounts
    CDV delete

  11. #11
    Z8Mania
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    Thank you- very interesting post and I will integrate this into my head.