Apocalypse Now? - The Economist

[robertpaulsen]

Apocalypse now?

Mar 19th 2008
From The Economist print edition
Investment havens in a time of panic

IF THE world is going to hell in a handcart, what should you buy? With newspaper headlines dominated by the credit crisis, and with big banking names perceived to be under threat, this is a question all investors need to consider.

Much depends on what form you expect the apocalypse to take. In recent weeks investors have been flocking to buy Treasury bonds, relying on the unimpeachable credit of the American government. But with the dollar falling almost every day, foreign investors may feel the government's credit is about as unimpeachable as Richard Nixon; they will be paid back only in devalued paper. And if, as some observers believe, the Federal Reserve has taken its eye off inflation in its zeal to rescue the financial sector, domestic investors may not find ten-year Treasury-bond yields of just 3.4% (on March 18th) all that appealing.

Perhaps index-linked Treasury bonds would be a better safeguard? After all, they provide protection against inflation. The problem is that other people have already thought of that. Earlier this month, the real yield on America's five-year issue was briefly negative; investors were willing to see their investments not quite keep pace with prices. That does not make them look great value.

Then there is cash. Fortunes have been made by being a cash buyer at the end of a bear market. But where to keep the money? Given the nervousness about banks, many savers will want to keep their holdings below the ceiling for deposit insurance (in America, $100,000 per saver per bank). The past few months have also thrown up doubts about money-market funds, some of which have taken a bit too much risk in the search for higher yields. So far, the fund-management firms have stood behind these funds. Come the real apocalypse, would they be able to do so?

more...

http://www.economist.com/finance/displaystory.cfm?story_id=10881361

[ulysses]

1. come the apocalypse,

I'll be wiping my ass with greenbacks as I sit next to my little latrine in the woods, like most everyone else.

[Speck Tater]

2. Lately I've noticed

that a lot of the places where I buy supplies have started putting per-customer limits on things like 50-lb bags of rice and flour. Too many people are stocking up right now, and supplies are dwindling. It hasn't quite hit the mainstream yet, but a LOT of people are really starting to quietly make some SERIOUS preparations for the fact that the excrement is already on a trajectory straight toward the fan blades.

[MISSDem]

3. I've posted the article in other places but it fits here also:

Someone has got to take this financial situation of the United States seriously.
http://commercialappeal.com/news/2008/mar/17/david-s-broder-we-dont-have-time-to-shilly/