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View Full Version : Société Générale tells clients how to prepare for 'global collapse'



Tylerdurden
11-19-2009, 05:12 AM
Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.


In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
Overall debt is still far too high in almost all rich economies (http://www.telegraph.co.uk/finance/financetopics/g20-summit/6228450/Debt-levels-risk-another-crisis.html) as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.


"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.
Under the French bank's "Bear Case" scenario, the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.
(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).
The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.
Inflating debt away might be seen by some governments as a lesser of evils.
If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.
The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.
SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.
Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.
SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.
Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.

http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html

Tylerdurden
11-19-2009, 05:13 AM
Let's go POMA.;)

The Bigfella
11-19-2009, 05:28 AM
Sure RAM, its called scenario planning... initially developed by Shell, who made bucketloads out of it in the oil shocks of the late 70's. Its what someone was thinking when they did the bet you outlined on one of your probably deleted threads when they invested in Bear Stearns.

Its a technique I've been known to use too. Made bucketloads out of it. You should try it too, rather than trying for the worst case every damn time.

Wanna know more?

Tylerdurden
11-19-2009, 05:35 AM
Wow, If its no big deal I guess the British papers must be hard up for story's.;)

What did Daniel Fermon tell you last time you were out for dinner?

The Bigfella
11-19-2009, 05:42 AM
Nah, don't know him - but I could tell you a lot about SG, but I won't, they were a major client.

Tylerdurden
11-19-2009, 05:45 AM
Nah, don't know him - but I could tell you a lot about SG, but I won't, they were a major client.


I figured.:rolleyes:

The Bigfella
11-19-2009, 05:51 AM
Why would you expect me to tell you about them? I answered the issue you raised, you've got no response to it? What's wrong? Can't deal with the issue?

The last SG person I dined with was the former Australian Rugby Union captain, who - at the time - headed up their mining division, but he left there last year.

So Mark... given you can't deal with the issue raised, do you delete this thread now, or when its sunk half way down the page like you've done with all the other recent failures?

Andrew Craig-Bennett
11-19-2009, 06:02 AM
Funny, I've just been chatting to SG on a deal; they didn't mention this.

The Bigfella
11-19-2009, 06:06 AM
Gee.... why would they Andrew? I believe they'd just put it together for their "special" clients.... like you know who.

The Bigfella
11-19-2009, 06:17 AM
Amazing... a RAM thread that he's left intact for an hour

Tylerdurden
11-19-2009, 06:18 AM
http://i30.photobucket.com/albums/c350/mudhutwarrior/Post-Apoc-Fox-News.jpg

The Bigfella
11-19-2009, 07:28 AM
So Mark, are you going to address the issue I raised, or just stay swinging on the mooring?

Tylerdurden
11-19-2009, 07:51 AM
41;)

LeeG
11-19-2009, 08:09 AM
c&p, multiple post, response to topic, snark counterresponse. Lather, rinse, repeat.

"It is an exploration of the dangers, not a forecast."

The content is just a vehicle for Marks mental state. To argue the content is to argue Marks emotional reality. That's why he comes back snarky and petulant. "oh yeah, it's how I FEEL"

Tylerdurden
11-19-2009, 08:22 AM
History is replete with examples of the majority ignoring the danger's until it is far too late. Either then they panic and society disintegrates around them or they promote a cult of personality that promises a solution which is never forthcoming. Based on these known facts I think most of you are complete idiots with those who constantly call for the masses to go back to sleep the most evil of the sort in the crowd of dumbfounded dip****es.
Sorry, I call it as I see it and its in my nature to do so no matter the degree in which is pisses off the dumbfounded.

I will cross over knowing I didn't hold back no matter the consequences. That's what matters to me. Not that I was the Prom King of the WBF. We have one of those already and many more wanting the same status. Tough love dude.;)

LeeG
11-19-2009, 08:26 AM
You stand amongst the giants of history as a guiding light to truth and liberation.

Tylerdurden
11-19-2009, 08:31 AM
You stand amongst the giants of history as a guiding light to truth and liberation.

No dumarse, I stand in the cesspool with everyone else. I just have a sensitive nose and you have learned to ignore it.

Chris Coose
11-19-2009, 08:36 AM
When the junk yard dog who guards the perimeter for us "complete idiot dumbfounded dip****s" crosses over what are we to do? OMG!!

Tylerdurden
11-19-2009, 08:41 AM
When the junk yard dog who guards the perimeter for us "complete idiot dumbfounded dip****s" crosses over what are we to do? OMG!!


Just come at me Chris,


We have met.
We get on like brothers in person. Next time I'm bringing my Honzo sword and cut his GD'ed head off.

And see.:rolleyes:

LeeG
11-19-2009, 08:44 AM
When the junk yard dog who guards the perimeter for us "complete idiot dumbfounded dip****s" crosses over what are we to do? OMG!!

In the years to come these days will be marked, BM and AM. Before and After the Mark.

Tylerdurden
11-19-2009, 08:49 AM
In the years to come these days will be marked, BM and AM. Before and After the Mark.

You guys seem fixated on lifting people up to status. That is foreign to me as I see "all men were created equal"

I guess it's the Paris Hilton videos.:p

Chris Coose
11-19-2009, 09:05 AM
Coming at you with a pasting of your insults is all you're going to see of me.

Tylerdurden
11-19-2009, 09:07 AM
Coming at you with a pasting of your insults is all you're going to see of me.

I know, so does everyone else. A man in name only.;)

LeeG
11-19-2009, 09:11 AM
You guys seem fixated on lifting people up to status. That is foreign to me as I see "all men were created equal"

I guess it's the Paris Hilton videos.:p

Just recognizing your efforts to turn the Bilge into an arcade game.

Tylerdurden
11-19-2009, 09:14 AM
Just recognizing your efforts to turn the Bilge into an arcade game.

Defender of the realm?:rolleyes:

The Bigfella
11-19-2009, 03:46 PM
..... I see "all men were created equal"



Good to see that you are working on keeping the average stable. Sorry it had to be you, but someone needs to balance the number.

The Bigfella
11-21-2009, 03:20 AM
c&p, multiple post, response to topic, snark counterresponse. Lather, rinse, repeat.

"It is an exploration of the dangers, not a forecast."

The content is just a vehicle for Marks mental state. To argue the content is to argue Marks emotional reality. That's why he comes back snarky and petulant. "oh yeah, it's how I FEEL"

What gets interesting is where the post is based on supposed facts, but if you read the source and discover he's talking about the wrong thing... he still persists.. despite the overwhelming evidence.

purri
11-21-2009, 04:28 AM
My take is that there is a 40% plus chance of a deflationary world economic environment if most don't subscribe to and implement quasi Keynesian economics. The major stimulus to stabilisation is that China revalue its currency ASAP. Otherwise the Euro becomes the major international trade currency by default.

The Bigfella
11-21-2009, 04:45 AM
Nah... no-one trusts the Europeans when it comes to currency

purri
11-21-2009, 05:16 AM
Eh,

Chavez (VZ) and Iran have moved to determine that as the preferred medium for petro products.

The Bigfella
11-21-2009, 06:27 AM
Yeah, well there's two key economies eh?

purri
11-22-2009, 06:30 AM
As for petro products then yes. Add Rus for gas then it's a key component.

The Bigfella
11-22-2009, 07:14 AM
As for petro products then yes. Add Rus for gas then it's a key component.

The two of them together just make 1% of world GDP. Add another couple of percent for Russia.

I don't think so.