The War on Savers….is there any doubt anymore?

[JWM in SD]

People, there is a War on Savers being waged right now. The front line of that war is the housing market in bubble locales and the USD.

They want your money and they want redistribute it to Risk Loves and the modern day equivalent of robber barons.

Tuesday was a major eye opener for me. I didn’t want to become part of the tin-foil hat club but something foul is afoot right now. It is evident that something has scared the Fed shitless in the past two weeks and I don’t think it was just North Rock and Countrywide either.

[Coronita]

imho, savers are always punished by inflation.

I guess that why the "advice" I've always gotten is that when you are young(er), you really shouldn't be putting a majority of your stuff in a low yield bank account/conservative investment. More so in this environment. Plus as a younger person, you have a much longer time to recover should any controlled risk you take goes south. Of course this "advice" usually comes from a mutual fund "advisor" or "broker "that's trying to sell a hot stock tip or mutual fund, but I guess at least in the spirit of things, I don't disagree with that. The only hard part is finding the other things that does better than the low yielding bank account consistently. The other hard part is one's own comfort in dealing with situations when you're wrong and you take a loss. No ones right all the time.

 

The story would be different for older folks in the late 40ies, 50ies, or 60ies+, where in that case you have considerably less time to recover, so having more things in cash/cd's to me would make sense, because you can't afford the risk toward your years of retirement.

 

[JWM in SD]

I’m not just talking about savings accounts FLU. The policies of the Fed and the Govt have pushed otherwise conservative investors towards increasingly risky alternatives since the interest rates have been so low. Like it or not, equities are going to crash eventually as well as the dollar. It is just a matter of time until it happens. I don’t even think diversification will protect against what is coming down the road.

[NotCranky]

I think they panicked at least 10 years ago.

[HereWeGo]

Given the CP crisis, savers (well, Treasury investors) needed a bit of a thwack, at least in the short term.

I find it odd that avowed bear market gamblers can offer any complaints about “risk loves”.

[Coronita]

I'm not just talking about savings accounts FLU. The policies of the Fed and the Govt have pushed otherwise conservative investors towards increasingly risky alternatives since the interest rates have been so low. Like it or not, equities are going to crash eventually as well as the dollar. It is just a matter of time until it happens. I don't even think diversification will protect against what is coming down the road.

I don't disagree that the equities market will crash some day. The question is when. No one knows. But one thing that probably will happen…As the "conservative" instruments make less and less sense, average joe will be putting things into high risk alternatives. That in itself is going to create another bubble, at which point it's really time to get out.

 

[JWM in SD]

“I find it odd that avowed bear market gamblers can offer any complaints about “risk loves”.”

What the hell does that mean?? Are you talking about my bet on CFC? Well, I gambled with what I was willing to lose. In fact, I lost 2/3 of the value of it before CFC suddently got into trouble. Don’t lecture me about being a bear market gambler. I am not going out and using margin to bet against the market in general.

[HereWeGo]

The purchase of naked puts or naked calls is nothing more than flipping (not that I have a problem with that.) Now admittedly that’s not risk on the order of 10:1 leverage, but the organizations that employ that sort of leverage have generally shown the ability to handle it over time, although obviously economic shocks can shake out the weak in spectacular fashion.

As for the Fed, were the CP crisis to cause banks to continue to be exceptionally conservative with their loans, many small businesses would find it impossible to continue their current level of operations. A .5% hit to the return on savings hurts, but unemployment would hurt savers even more.

[JWM in SD]

“A .5% hit to the return on savings hurts, but unemployment would hurt savers even more.”

Did you see what the Saudis had to say about that? It hurts the dollar…it hurts us all. And please spare me the nonsense about cheaper exports. 25 years ago maybe, but unless count Britney Spears and the rest of the crap we export, I don’t want to hear it.

I get your point about unemployment, but that assumes it won’t happen anyway.

As far as flipping goes, well there is a big difference. I din’t leverage my future income…which is precisely what house flippers do and now they are stuck. Second, when my puts were down 2/3, I wasn’t asking to be bailed out by the taxpayers.

[HLS]

JWM,
I’ve been on the same page as you. You’ve been saying MACRO since I’ve been on this board.

I don’t want to think of it as “tin foil” but I agree that something IS up.
I don’t remember if you posted on this thread:

http://piggington.com/what_should_we_do_to_protect_ourselves

Finger pointing is all over the place. There are millions of people who are blindly/mindlessly contributing to retirement accounts, flooding Wall Street with cash, under the guise of “security for their future”

Most people have no clue what they are doing JUST LIKE the ones who bought houses with no clue to real value.

The big boys are scared and don’t know what to do.
Mao’s Little Red Book didn’t address this situation.

They NEED to protect the system, and perpetuate the myth.
What they said wasn’t an industry & Wall Street bailout is EXACTLY a bailout.

The FF rate cut was good for less than 24 hours. I’m guessing if there had not been a cut, DOW would have been down 600-700 points. (That down day is still coming)

A 25 point cut with a statement to monitor would have been fine. A 50 point cut confirms that they are so scared and aren’t sure what to do. Let the dollar fall, forget about inflation for now.

Don’t forget, they ALWAYS say “We are doing everything that we can” I just LOVE that line !!!

You know this stuff better than anybody.

[Coronita]

Finger pointing is all over the place. There are millions of people who are blindly/mindlessly contributing to retirement accounts, flooding Wall Street with cash, under the guise of "security for their future"

Most people have no clue what they are doing JUST LIKE

 

So I'm just curious. Folk(s) that are saying that contributing blindly to retirement accounts is dumb, or playing with the market is dumb, what are you specifically doing to improve your odds of coming out ok? Putting cash in a mattress, or buying $700+/ounce gold? Putting into foreign currencies?

Not meaning this as an attack, but I see here a lot of "that's a bad idea, this is a bad bad, blindly doing this, blindly doing that…" So for the folks that think they aren't "blind", what specifically is your strategy? Please, let's play the "three blind mice, see how they run game".

 

My take is in the short term big boys are going to try to squeeze the hell out of shorts to pump up the market. Then when people start jumping in on long positions, the big boys are going to dump on all the longs. But that's just the cynical side of me talking. The big boys can endure massive losses either way before average joe blinks.

 

[JWM in SD]

“My take is in the short term big boys are going to try to squeeze the hell out of shorts to pump up the market. Then when people start jumping in on long positions, the big boys are going to dump on all the longs. But that’s just the cynical side of me talking. The big boys can endure massive losses either way before average joe blinks.”

I think you are right. You just answered your own question. Of course, if you want to try and time that correctly, then go for it.

[Ex-SD]

JWM & HLS……………IMHO, I think you two are about as “right, as right can be”. Bravo!

[JWM in SD]

“I think they panicked at least 10 years ago.”

Yeah, rustico you are right. Greenspan failed to correct his errors and now we are gonig to pay for it.

[JWM in SD]

Look FLU, sorry for being flip about your question. I’m desperately trying to figure this out as well and right now my best answer is to get out of the USD and hedge until I can see that it is gaining strength again. I just think that the probability of that is less than a lot of people are willing to acknowledge at this point. The decisions we see on the surface don’t make sense anymore. That is why I think something is going on. To assume otherwise is to say that otherwise intelligent people in power are bumbling idiots. It is getting very confusing and it’s making me increasingly nervous about the future.

[Author]

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