"More Americans Stashing Cash In Home Safes".

http://www.smartmoney.com/plan/banking/m....

Including safes built into the bed frame.

edited

"Confluence" probably is the word of the week.

A man called last week. His firm was interested in doing a buy-out (taking assignment) of a cell tower location lease on some of my mother's land. Here is an excerpt from the email I sent him yesterday evening.

"At this point, we have no desire to go forward. Personally, I found the MFGlobal failure to be a warning that it is time for disintermediation. I have closed my brokerage accounts and am out of the stock market so that there is no need to be concerned about the health of my broker. We have chosen to keep our dealings very simple, straightforward, and unleveraged... Until Jon Corzine is in prison, I doubt that we shall seek any greater complexity even if we may miss out on a few opportunities."

Quote:

When the confidence in the banks and the brokerages is lost, what will people do? ... If all of those investments get turned into cash...

I keep seeing questions and assumed answers like this. They convey a dangerous and fundamental lack of understanding.

Most people seem to forget that in order for one entity to sell something, there MUST be another entity willing to at the same time buy what is for sale. When one person turns an investment into cash, another person is turning cash into that investment.

Everyone cannot sell at the same time. Who would buy? The few remaining buyers would pay at most pennies on the dollar (or less). The previously assumed wealth would be vaporized.

No bid = Bankrupt.

This is the fundamental flaw in the retirement plans of the baby-boomers. They are planning to sell what they own, at current prices, to each others children, and then using the cash to pay each others children, to provide for them until they die.

The problem is their children are collectively broke compared to the baby-boomers. Therefore they CANNOT BE the buyers at current prices. In order for the children to be the buyers, the wealth of the boomers has to be marked to market, and when that happens the truth will be that the boomers are just going to be handing over the keys to junior, and living with the kids until they die.

The kids will not be funding golf, cruises and trips to Paris for Mom & Pop. That $500,000 McMansion you call your nest egg? I can't pay $500,000, but I can pay $100,000. Whoops, there goes that retirement plan. It'll be sell assets at any price, or starve and die.

I'm willing to provide my parents with the same necessities they provided me when I was growing up. Food, shelter, clothing and comfort. Luxuries? Bwahahaha.

I have the same view on "investors" who were nothing more than gamblers. I'll bail out anyone who bought APPL at $600/share. They won't like my offer though...

Exactly Obs.

The premise that "oh we'll sell to X" assumes that "X" has MONEY to buy with.

But what if "X" is deeply underwater (e.g. student loans) and has ZERO FREE CASH FLOW BEYOND FOOD AND BASIC SHELTER to buy WITH?

Now what?

Quote:

The problem is their children are collectively broke compared to the baby-boomers. Therefore they CANNOT BE the buyers at current prices. In order for the children to be the buyers, the wealth of the boomers has to be marked to market, and when that happens the truth will be that the boomers are just going to be handing over the keys to junior, and living with the kids until they die.

Tell that to housing bulls. Most people I know form 25 - 35 have nothing. Those that tell me they do save a lot think 'a lot' is $20K. THey lose their jobs and it is game over for them.

Quote:

Now what?

Suddenly, Reality!

Obsidian wrote..

I'm willing to provide my parents with the same necessities they provided me when I was growing up.

Be sure to treat them the exact same amount of deference and respect that they showed to you when you were the dependent one.

Mayor most 30 yo people that have saved 20K are probably quite prudent. If you think about how incomes have not gone up yet the cost of living has gone up a lot. I thought I saw somewhere that most people under 50 don't even have 25k in there retirement accounts.

How about Ben just takes out his helicopter and gives money to households? I figure if you really did get the domino scenario, there would be considerable political pressure to do SOMETHING, even if severe inflation was the result. They may not go after those responsible, but by now you have to expect a government program of some sort. You'll hear it touted in the media as a radical solution for a radical crisis. People will grumble about higher prices, but they'll say that it was surely preferable to losing everything. All will be precisely timed by those pulling the strings to maximally benefit from these swings of deflation and inflation of course.

Uh oh, I have an account with Trademonster, and Penson is the custodian. Time to liquidate and get the funds back.

Gen, do you think the larger "investment" houses (Fidelity, Schwab, etc) have similar reserve "problems?"

Quote:

How about Ben just takes out his helicopter and gives money to households? I figure if you really did get the domino scenario, there would be considerable political pressure to do SOMETHING

In 1948, when the German Mark was introduced in West Germany, all German families received 60 Marks. From early 1945-mid 1948, the REAL currency in the western sector was American cigarettes.

Ok, so in what order will the account assets vaporize ala MF Global?

Your paper check when you zeroed the account?
Derivative and future positions that were never real?
Commodity and option positions that were never real?
ETFs? ETFs seem a tad different than your normal stock or bond position.
Stock and bond positions that were never real, i.e. your broker short saled them to you and just took your cash for their proprietary desk>
US treasuries that were never real, again, never even purchased, or purchased as a short sale.
Cash in Broker bank sweeps?

I don't have the answers, just asking and wondering.

By the way, I do not think we have seen any bankruptcy trustee 30 or 90 day clawbacks at MF Global ( or Lehmans?), too many insiders got their electronic wires in the last 7 days?

Mo, I understand the payoff to some port authorities is in cigarettes. I hear some of the bribe victims try to make the best of it by getting the least desirable cartons for the payoff.

You have PAPER that say's you own what?


Real wealth is not paper, that's for bag holders.

Makes me think of a story.
An Arab father took his second son Abed the Quick out in the dessert on their camel. Rode until they came to this field of jagged rocks the camel had trouble walking through. He stops and steps off the knelling camel and lets it stand back up.
Jump my son! he says holding his arms out.
Father it looks dangerous. Are you sure you can catch me? I'm not so little anymore and the rocks are nasty.
I am your father. Don't you trust me? Jump!
So the kid jumps and his father yanks his arms back and he crashes face first into the jagged rocks...
Ahhh, you can't trust anybody, not even your father! the kid wails.
Oh joy, you make me so proud. Such a smart son. You understood the first time, Your brother, my first son, Abul the Slow, SIX times he jumped!

How many M F Globals does it take before they get it?

I would merely note that it is your fine friends in "Law Enforcement" who have brought us to where we are now, in spite of their oath to the Constitution. Without that oath, they are nothing more than Thugs with Guns. Do you know of any appropriate way of dealing with Thugs with Guns?

As Seven said, this is scary. Is Tickercon going to '2' soon ?
Part of my brain says 'this could really happen" and another part says
"the super-rich are not prepped (in the majority) - this can't happen."

Could we imagine if every stock had a 'gmcr' day simultaneously?
Shockwave is an understatement.

Assuming you have a brokerage account that is not PNSN, and not trading on margin, what are the safe options?

Sell all options/equities and move money to a Vanguard bond fund?

Go to 100% cash and move the money out into an FDIC insured account?

Grab your guns and gold and head for the hills?

+1 to Obs.

I keep telling this to my colleagues, all you have is someone else's promise when you own any paper asset including a bank account. That person/company may have full and honest intent to keep their promise but there is no guarantee that they will be able to. What can't be paid, won't be paid.

House values are just like stock values, what they are really worth is what someone else is willing and ABLE to give you for them. The house has one redeeming quality in that it is a durable place to shelter yourself versus just paper with pretty patterns printed on it.

We are in for a mess of trouble, what the exact form of that trouble will be I have no idea. I can see a situation where cash/gold/silver in a mason jar is a great strategy, I can see another where being borrowed to the hilt with 20+ year loans is a great strategy. If I had to pick, I'd go with the cash/gold/silver in a mason jar though.

Flap

My thesis is in the end both the saver and splurger end up in the same place - with nothing. Now is the time to be storing some food and water. If I have food and someone wants to give me gold for it, I'm keeping my food. You can't eat gold.

I think this would be an "equal opportunity" market crack-up. Those in Congress and .gov employees who have squirreled away large amounts of money, are no smarter than the average Ticker reader at protecting their assets. In fact, do you think for a minute that Boehner, Romney, Pelosi, Reid, Hillary and company are better able to protect their assets than anyone else? I don't think so. Cryin' John won't be the only one bawling when their fortunes get vaporized.

John will be crying for the children of course...