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View Full Version : What do our Brit friends think of this?



Dutch
06-23-2008, 07:47 AM
It appears that not everyone is convinced the sky will stay in place.

from the telegraph



The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
http://www.telegraph.co.uk/money/graphics/2008/06/18/rbs.jpgRBS warning: Be prepared for a 'nasty' period
Such a slide on world bourses could amount to one of the worst bear markets over the last century.

RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.
"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.
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"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.
"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.
US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.
The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.
Morgan Stanley warns of catastrophe (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/16/bcnecb116.xml)
"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.
Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.

Andrew Craig-Bennett
06-23-2008, 07:49 AM
This Brit agrees.

Dutch
06-23-2008, 07:52 AM
I was wondering ACB- how much credence to give to RBS? I dont follow overseas economics much.

Andrew Craig-Bennett
06-23-2008, 07:57 AM
Britain's second largest bank; one of my best friends, a Chinese lady, works at their London HQ. Has grown by acquistion, taking over NatWest in England and, most recently, ABN-Amro in Holland.

Which is not to say that their economic forecasts are ncessarily brilliant, but this particular one does look right.

Nanoose
06-23-2008, 08:55 AM
So, is it time to cash it all in for a while....let things settle out and get back in?

Dutch
06-23-2008, 09:28 AM
I wonder how safe that "cash is the safe haven" is going to be with inflation skyrocketing upward.

We havent even begun to see what the floods in the midwest are going to do to food prices yet. Like it or not the US is still the worlds bread basket.

Andrew Craig-Bennett
06-23-2008, 09:39 AM
I had the wryly amusing experience of piloting an English friend, an ex-seaman, now a Government servant, round the gold shops of Hong Kong last weekend. Let us say that the penny dropped with quite a thud when he realised what four nines is now costing.

Nanoose
06-23-2008, 09:40 AM
I had the wryly amusing experience of piloting an English friend, an ex-seaman, now a Government servant, round the gold shops of Hong Kong last weekend. Let us say that the penny dropped with quite a thud when he realised what four nines is now costing.

Sorry...four nines?

Andrew Craig-Bennett
06-23-2008, 10:10 AM
Sorry...four nines?

Four nines = Gold of 99.99% purity, expressed in Asia as .9999 gold.

Basically, pure gold.

Not used for jewellery in the West, because it is soft and wears quickly, but in places where jewellery and the family savings are much the same thing, such as much of the middle east, it is the usual form of gold.

My wife and I have two sets of wedding rings; the .9999 ones that we exchanged and the 18ct ones that we wear!

Tylerdurden
06-23-2008, 11:40 AM
I posted the links to this to J on another thread. Morgan Stanley had things to say too.

Morgan Stanley warns of 'catastrophic event' as ECB fights Federal Reserve



http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/16/bcnecb116.xml

No Play here in the states but Pritchard has been on top of this and accurate.

The Bigfella
06-23-2008, 07:44 PM
Rio Tinto picked up an 85% increase in the price of the iron ore they are selling to China last night. Expected to deliver another $58 billion boost to our economy this year.

Tylerdurden
06-24-2008, 04:52 AM
If you can get your hands on Bot chain it would be a good portable means of wealth in any collapse. If gold confiscations come chances are it will be coins and bar and jewelry would be exempt. Maybe not but worth a shot.

Tylerdurden
06-24-2008, 05:04 AM
Brokers threatened by run on shadow bank system

Regulators eye $10 trillion market that boomed outside traditional banking

http://www.marketwatch.com/news/story/big-brokers-threatened-crackdown-shadow/story.aspx?guid=%7BFA23DF5A-918F-41DA-B794-7E553ADAFAA7%7D

WX
06-24-2008, 05:33 AM
Pay cash and don't rely on credit. If you haven't got the readies, don't buy it...minimize debt. That has been my method for years and as far as I am concerned it is the difference between poverty and personal power.