Financial mayhem

[Wolf DeVoon]

FT Alphaville (yesterday):

With many credit investors sitting on the sidelines, the only catalyst for performance in credit markets is likely to be intervention from the Fed or US government, said Jim Reid at Deutsche Bank, in a note to clients.

"The Fed has now stepped up a gear and ultimately we probably need the US Government to do so too. Even though we believe in free markets and believe that pain should be felt after such an unruly credit binge, we also think we are close to a financial system meltdown. At this stage moral hazard arguments need to be put in a wider perspective."

Michael Nystrom:

Warnings that have been sounded on websites such as this one appear finally to be coming true, as confirmed by none other than the venerable Wall Street Journal in a front page article titled, "Debt Reckoning: US Receives a Margin Call."

"The US is at the receiving end of a massive margin call: Across the economy, wary lenders are demanding that borrowers put up more collateral or sell assets to reduce debts. The unfolding financial crisis - one that began with bad bets on securities backed by subprime mortgages, then sparked a tightening of credit between big banks - appears to be broadening further. For years, the US economy has been borrowing from cash rich lenders from Asia to the Middle East. American firms and household have enjoyed readily available credit at easy terms, even for risky bets. No longer."

Did you ever think news like that would ever make it off the internet and into the pages of the Wall Street J? Even I was beginning to have my doubts. But the news is seeping even further into the mainstream. This week's Time Magazine has an article titled "10 Ideas that are Changing the World." Idea #8 is "The New Austerity:"

"Americans simply don't have enough money to pay back the mortgage and credit-card debt they've run up. That reality is forcing banks to retrench as loans gone bad shrink their capital bases and falling house prices shrink the collateral that homeowners can borrow against. And it will presumably force chastened consumers to change their ways as well."

Americans simply don't have enough money... What does it mean? It means defaults, economic loss and a spiral of fear and more loss. It means more Bear Stearns. Time's article quotes David Rosenberg, an economist at Merrill Lynch: "I'm not saying we're going back to our parents' level of frugality, but what we have witnessed in the past 20 to 30 years - and especially the parabolic credit growth of the last five years - is going to be bursting in the next decade." If not back to our parents' level of frugality, then what? To our grandparents' level? How can anything less be avoided, in an era when most people are already working full speed, maxed-out and yet still need credit to survive? And now they're cutting off the credit!? The result for households will be the same as for Bear - massive liquidation. And the Fed is in no position to do anything about it.

Edited March 18, 2008 by Wolf DeVoon

[merjet]

Volcker: Fed’s ‘Extreme’ Intervention ‘Raises Some Real Questions’

Former Federal Reserve Chairman Paul Volcker said the Fed’s decision to lend money to Bear Stearns Cos. to keep it from collapsing is unprecedented and “raises some real questions” about whether that’s the appropriate role for the Fed. The wisdom of the decision depends on “how severe this crisis was and their judgment about the threat of demise of Bear Stearns,” Mr. Volcker said on the Charlie Rose Show on Tuesday evening. “That’s a judgment they had to make and an understandable judgment.” It is “absolutely” not “what you want for the longstanding regulatory support system.”

Excerpt:

Volcker: We’ve seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with a financial crisis, which raises some real questions about not only for the Federal Reserve and its authorities, but for the structure of the financial system… The Federal Reserve is designed to lend to banks. And the banks were considered to be at the center of the financial system, and lend liquidity, provide cash in return for good assets, when a bank got in trouble. Now they found in this case, where some of the investment houses were in trouble, and prototypically Bear Stearns … it’s lightly regulated by the SEC or some other, but not for the same reasons. They haven’t got the concern over the stability of those things….We’re going to lend to them and protect them, shouldn’t they be regulated? (Source)

I take Mr. Volcker to draw a line between retail banks and investment banks. The Fed's regulatory purview is retail banks. Bear Stearns is an investment bank. JP Morgan Chase is both kinds. For more detail on distinction: source.

Edited March 19, 2008 by Merlin Jetton

[sjw]

"I'm not saying we're going back to our parents' level of frugality, but what we have witnessed in the past 20 to 30 years - and especially the parabolic credit growth of the last five years - is going to be bursting in the next decade."

And the reason why the spending habits of the Federal Government aren't mentioned is???

People blame Americans who spend, yet it is the Federal Government that steals in the form of inflation from savers and gives to debters (in order to help with its own debt). People know this. "Mild" inflation is taken as a fact of life. So they latch on to the inflation train by getting themselves into debt. The more debt you can be in now, the more you'll be worth later. And then throw in then mortgage interest tax deduction and there's even more motivation to max out.

Saving counterfeit money is stupid. The best practice is to trade it for something useful.

Shayne

Edited March 19, 2008 by sjw

[Brant Gaede]

Well, the specter of a generalized financial panic has passed for now. I am simply mostly in cash buying certain securities when they are down and selling soon after for a quick profit. The basic underlying problems that weigh on equity markets have not been addressed, much less solved.

--Brant

[Wolf DeVoon]

I agree with this FT assessment: rally up, very short term.

It has been a terrible week, says the FT’s John Authers in Thursday’s Short View column. Can the stock market now indulge in a brief bear market rally?Wednesday’s Merrill Lynch survey of fund managers made clear that the preconditions are in place.

More global fund managers are overweight in cash, compared to their benchmarks, than at any time since the survey started in 1998. Fund managers also believe that equities are undervalued by the biggest margin since the bear market bottomed in 2003, and that bonds are overvalued.

So, there is a lot of cash on the sidelines, in the hands of managers who believe stocks are cheap, and the end of the quarter is close. Many may want to use that cash to buy stocks before the quarter is up.

There is another reason to expect a rally: the bounce from Monday’s panic levels, as traders realised that Wall Street’s banks were not about to collapse one after another, has led to a rash of predictions that the bottom has been hit.

There are also hopes that the authorities have at last found a “silver bullet” to end the crisis. False hopes have been invested in several other putative silver bullets, but the news that Fannie Mae and Freddie Mac, the powerful US mortgage agencies, will be allowed to buy more mortgage-backed securities is as good a candidate as any.

History’s biggest bear markets have all had several big rallies when investors thought the worst was over. It is easy to stage a rally for the short term, even if the financial system’s long-term problems remain.

Does a bear market rally need a catalyst? Not necessarily. Tuesday’s surge was triggered by terrible results from two investment banks. Given how negative sentiment had become, the mere fact that they were not epochally disastrous was enough to trigger a rally. In the short term, the mere absence of bad news (which is not a given) might allow the markets to enjoy a bounce.

[Brant Gaede]

Beware of comodities, even gold, short term. Too much big money speculation.

--Brant

[Wolf DeVoon]

Beware of munis.

March 19 – Bloomberg (Jeremy R. Cooke): “The outlook on Florida’s $13 billion of general obligation bonds was cut to negative from stable by Moody’s…, as the economic slowdown and housing recession depress state revenue estimates.”

March 20 – Bloomberg (Michael B. Marois): “Local governments across the U.S. are learning an expensive lesson from the auction-rate bond market: When Wall Street bankers offer a financing deal that seems too good to be true, it may just be. Sewer officials for California’s Sacramento County sold $250 million of auction-rate securities in November 2004 so they could pay annualized interest as low as 1.35%... Borrowing for 34 years at a rate that reset every seven days seemed the best of both worlds -- until it soared to 12% last month. ‘I’m going to pay a little bit more attention to the dark side of the deal’ now, said Marcia Maurer, CFO of the county’s sewer district… ‘When bond attorneys talk about the worst-case scenario, people are going to be a lot more ready to believe that the worst-case scenario really can happen.’”

[Wolf DeVoon]

March 24 (Bloomberg) -- The U.S. may pay a steep price to free itself of its economic and financial travails: bigger government, faster inflation and a poorer country.

-------

Opinion is evenly split: half expect raging inflation, others fear collapse and deflation. Yikes.

This is an opportunity to talk a bit about the world economy. It's unstable, partly because arcane financial products ("derivatives") were multiplied into a huge pyramid of obligation that lost any relation to real, tangible assets. A home mortgage became a bond that was resold as a share that was hedged by an insurance policy on borrowed money that was separately reinsured against default by another lender who borrowed short-term money market funds. Sub-prime and interest-only mortgage lending could not have happened without this nutty scheme to launder and eliminate credit risk.

But the greatest threat to financial stability, as always, is governments. At present, the gap in asset quality is estimated at $1 trillion, which is to say that banks and mortgage lenders and bondholders have $1 trillion on their books that does not exist and can't be sold or traded. Some estimates of loss are even higher. No one wants to unwind or settle their mortgage-backed securities and credit default swaps, because it would bankrupt too many players, maybe all of them in a panic to unload their junk. So, the Federal Reserve is doing the unthinkable: loaning money to the worst offenders, taking 'private label' mortgage-backed securities as collateral, and underwriting bondholders of failing firms like Bear Stearns who are deemed 'too big to fail.' The government sponsored mortgage buyers Fannie Mae and Freddie Mac have been exempted from failure, too, and given permission to buy buy buy bigger and bigger liabilities. Foreclosures are going to be halted, fudged, suspended, jawboned at the margins -- and will keep rising, because too many folks are financially upside down and can't pay their mortgage. Credit card and car loan defaults are rising, too.

State and Federal borrowing, trade deficits, off-budget war costs, ethanol subsidies, cheap money, tax cuts, tax rebates -- government is the drunken sailor in this drama. Nor is it confined to US official mismanagement. Wherever you look in the world, from labor rigidity in Germany to impending famine in China, commodity hoarding in India and Japan, expropriation in Russia and Venezuela -- government 'do-gooders' are the perpetually blundering economic villians.

Well, finally, the jig up. The world financial system is frozen. We've been regulated and manipulated into a pyramid of unpayable debt.

(Financial Times, Mar. 24) -- What do a Spanish clothing retailer, an Irish telecommunications group, a German maker of plastic packaging film and a French house-builder have in common? They are all so-called "zombie" companies, bought by private equity in heavily leveraged deals shortly before the debt bubble burst last summer and now judged by investors to be worth less than they owe to creditors. "These are zombies, companies with unsustainable financial structures but no triggers for the banks to force them to renegotiate," says Edward Eyerman, head of European leveraged finance at Fitch.

More zombies: GM, Sears, Boeing's 787.

W.

Edited March 25, 2008 by Wolf DeVoon

[Brant Gaede]

Very good article by George Reisman on gold and deflation:

http://www.georgereisman.com/blog/

I suggest almost anyone keep gold coins and stock certificates in a bank safe deposit box, do not buy and sell Kruggerrands as dealers will require a SS number, do not have US bank accounts in excess of $100,000 (in fact try to limit oneself to one FDIC bank per that amount of deposits), do not have brokerage margin accounts unless a trader, if one owns stocks take delivery of those certificates, do not leave them with the broker. Do not buy a home, rent. If owning a home sell it now or keep it for the next ten-twenty years. Get out of debt. Save. Have a fallback profession, not job. Buying stock means for a multinational corp., not any financial, not any technology company--buy: paying no less than a 4% dividend like Altria's spin off PMI (Phillip Morris International)--not any retail save food. The more gold the better (to 20% net worth). The more stocks (which stocks?) or bonds the worst. PMI, available in a few days, is the ONLY particular stock I'd recommend to anyone max 20% of net worth (not counting the home). Gold is a good buy now at just over $900/ounce after a 10% pullback, but should be purchased over time using dollar-cost averaging. Money left with any broker should be minimal. Avoid commodities other than gold unless you want to short copper, potentially a tremendous win. I have not covered all the bases for everybody is different. Savings are going to yield less and less. Bonds too. If one needs income 20% in PMI is not enough. Gold in a safe deposit box cannot be counted on; we don't know when it will ramp, but bills come due every month. Generally speaking giant multinational companies paying a generous dividend are the safest, followed by defense stocks (unless Obama wins). AVOID PIMCO! (Bonds.)

Do not be deluded by "Bear Market Rallies." We are in the midst of one. They are for traders or for selling into strength, not for investors. Above all, don't be afraid of missing the bottom; go ahead and "miss" it. A true bull market goes on for years if not decades. We are at the front door of a giant consolidation. China, especially after the Olympics, is going to be especially toxic.

--Brant

Edited March 25, 2008 by Brant Gaede

[Wolf DeVoon]

Very good article by George Reisman on gold and deflation:

http://www.georgereisman.com/blog/

I suggest almost anyone keep gold coins and stock certificates in a bank safe deposit box...

Thank you, Brant. Very important link.. Your advice is spot on, too. I haven't finished the George Reisman article yet (it's quite long, excellent). I copied a paragraph that reinforces what you were saying about gold coins and not letting banks or stock brokers hold your money:

The functioning of an economic system depends on clear knowledge of who owns what and who has the legal right to do what with what property. It cannot wait years for judges to make clear and final decisions about such matters, which is the likely period of time it would take them if the present typical performance of our judicial system is any guide.

FDIC insurance is only as good as the speed of a blame-shifting, duck-and-cover bureaucracy in a spiraling, uncontrollable financial panic. I have two small CD's in two different 'money center' banks, sold off half of my stocks and bonds, and I'm buying physical gold again, just like you said.

For those who have little or no savings (many people are living from paycheck to paycheck), stay tuned. I want to finish reading Reisman's article, and then I'll be right back with ideas for the so-called 'working poor.' Don't be offended. Most Americans are underwater on their mortgage, car note, etc.

W.

Note that Reisman openly acknowledges that his 100% gold monetization proposal "will be almost completely ignored and has virtually no chance of being enacted in the foreseeable future." That's not the point of studying what he says about interest rates, bank capital and checking deposits. Reisman explains recent financial history in language you can understand and use to make practical decisions.

Good technical analysis of gold & silver posted today

Edited March 25, 2008 by Wolf DeVoon

[merjet]

I largely agree with Dr. Reisman's article. He advocates a commodity-based currency in gold. I believe it should be wider -- a basket of commodities with gold being one item in the basket. A dollar could be an amount of gold plus an amount of silver plus an amount of crude oil plus probably some other commodities. Note I use "plus", not "or". The U.S. government's strategic petroleum reserve is now worth about $70 billion (link). Other candidates as components are paper (as used in a copier), wheat, corn, natural gas, and so forth.

A basket would result in more stable prices over time than a single commodity, just as the price of a portfolio of common stocks, e.g. the S&P 500, is more stable than the price of one of its components, e.g. Alcoa or IBM. Over time the components could be occasionally adjusted to reflect their prevalance in the economy, just as the S&P 500 components are adjusted to reflect some companies becoming larger and others smaller.

At times I have thought about the silverite movement of the late 19th century. The proponents wanted to monetize silver with sixteen ounces of silver being equivalent to one ounce of gold. Monetizing silver was a big plank in William Jennings Bryan's run for the presidency in 1896 (link). They advocated an "or" method, not a "plus" method. If they had advocated the "plus" method and succeeded, it would have been the first step in making a basket.

[Wolf DeVoon]

Noted in passing, I am utterly unable to comprehend this:

Liquidity Traps and Negative Repos

[sjw]

If deflation is expected, then isn't buying gold a bad idea (except for diversification)?

Shayne

[Brant Gaede]

If deflation is expected, then isn't buying gold a bad idea (except for diversification)?

Gold hedges the dollar. Note I suggested no more than 20% in gold, so it is a diversifed asset. Deflation/inflation represents a range of volatility but inflation eventually wins. I'd personally rather be short copper than long gold, but gold is safer. I think Reisman in his calculations neglected to take into account that deposits up to $100,000 would not be part of a run on FDIC insured banks so things aren't potentially as bad as he projects. Legal currency laws also support the dollar as does debt: If someone has debt he needs dollars to pay it off. It is also pretty obvious that The Fed will all but take over the banking system if it has to to support the dollar and the financial system. Ergo, more to fear in inflation. It is dangerous to just go out and buy a lot of gold. I think it should be purchased bit by bit over time with X amount of dollars. When the price goes up one buys less. Down, one buys more. I don't see how a severe recession can be avoided. It is a consequence of gigantic deleveraging of assets that have no transparency.

--Brant

[sjw]

Brant,

Thanks for expanding. I think your point about FDIC is exactly right and a serious flaw in Reisman's analysis.

In theory, I'd be worried about being short on copper given the high risk of inflation--it may indeed go down in market value, while not going down in price. Another example of the evils of a subjective "fiduciary unit" rather than objective money.

It was fun to see Reisman taking for granted that a gold standard would be ideal given TOC's recent laughing at Ron Paul for advocating the legalization of gold as a monetary unit. Idiots.

Shayne

[Brant Gaede]

Noted in passing, I am utterly unable to comprehend this:

Liquidity Traps and Negative Repos

As far as I can tell from the small amount of time I'm willing to spend on this, the liquidity the Fed is trying to force into the system is being sopped up by banks to improve their capital structure, but is not being loaned out--passed on to consumers and injected into the economy. As interest rates go down this ironically reduces the value of that to the banks. It seems this is made worse by flight to safety by buying short-term treasuries. So more liquidity is helping to cause less liquidity. The Fed is pushing on a string in a futile attempt to fight the business cycle--a bear coming out of a quarter century hibernation.

--Brant

[Wolf DeVoon]

I promised that I would post something on the topic of what to do, if you have limited income, no savings, big bills, unpayable debts. First, I want to assure you that I understand the situation. I've been broke, many times and many places. Declaring bankruptcy is not important. Getting yourself emotionally and philosophically free of obligation is much harder and more fundamental. In the current financial crisis, it doesn't matter a hoot whether you keep your agreements. Good credit counts for nothing now. Cash is king on Wall Street and in your wallet, purse, or pocket.

I'm going to cite some of my previous writing. It's pretty coldblooded stuff. It boils down to this: You have a right to exist for your own sake. When shit comes to holler, do whatever you have to do (or realistically can do) to provide for yourself, your spouse and children. Sometimes we have to make very difficult choices and save the innocent, the babes-in-arms, and wish everybody else good premises.

http://www.geocities.com/dv05131970/escape...apocalypse.html

Poor people don't hesitate, don't agonize over interest rates. They just get in the jalopy — all seven of them, including the baby — and head for the hills. When they arrive, sure enough, Dad will find some kind of work, Mom will join a church, and everybody will get to eat. It's the American Way that Woody Guthrie sang about: This land is your land, this land is my land.

http://www.geocities.com/dv05131970/nomoremrniceguy.html

Sit your kids down at the kitchen table and explain the facts of life. Mommy and Daddy are not sending them to school, because it's dangerous to their mental health. If your parents and siblings are lost causes, lose them. You have a right to live for your own sake — remember? — therefore, no blood relative has an unearned, intrinsic chokehold on your liberty and happiness.

http://www.geocities.com/dv05131970/deathofindustrial.html

Our enjoyment of life is determined by real production of physical goods, the supply of which will likely erode as we migrate financial assets to untaxable safe havens — and our most profound communication with one another is best served by real intercourse and physical society. Tragically, to save the world, we must let it go, starting with television. A widescreen DolbyPro THX surround-sound home theater, filled with reruns of The Simpsons, is a luxury I am prepared to do without. I've already heard as much donut eating, belching, and "Doh!" as any rational person could conceivably need or want.

http://www.geocities.com/dv05131970/humandignityfreedom.html

You have a right to your own life, and you have a personal responsibility to do justice, if you wish to live in liberty. There is nothing more to be deduced from history, or from the opinions of your overfed suburban neighbors, or from further debate of libertarian consequentialism or the price of tea in China. World events are moving faster than your brain is. Whatever may be said or done elsewhere in the world by corporate sovereigns, which you have no individual power to check, it remains your inalienable duty as a freeman to govern yourself, to personally establish justice and promote liberty.

http://www.geocities.com/dv05131970/scoundrels.html

Having been a scoundrel for much of my life, and a bum before that, the moral superiority of pirates is obvious to me. It is my great good fortune and privilege to be working for one now, and I hope the trend continues. In the not too distant future, when similar opportunities arise, I will always answer the call to action -- to drop what I'm doing and sail into the Unknown, where free men undertake the greatest challenge of all -- to deploy their relatively feeble individual powers against overwhelming force and punch a hole in the status quo. It is by such random acts of rebellion that the world is moved forward, from the darkness of institutionalized deceit and compulsion, to an open society based on freedom and candor, me hearties!

http://www.geocities.com/dv05131970/soap_day.html

As a de facto anarchist, I advocate and rely upon the Fuck You school of political philosophy. It is important to me beyond measure, because the right of an individual to exist for his own sake is paramount, not merely as an issue of morality, but intrinsic to individual purpose. All examples of personal purpose benefit the whole of society, whether these may be innovators or serial killers. Deprived of coercive power, beyond the fixture of one man's blood and bone, an individual cannot do much harm. Put him in a legislature, you multiply his wickedness by a thousand. Make him head of state and nothing good is possible.

http://anti-state.com/article.php?article_id=476

Family is a personal security issue. If you keep phoning home, your freedom is fairy dust. I personally believe that family ties and best buds are the chief obstacles to liberty. Government is historically and inherently unable to accomplish much of anything, whether in Vietnam or Iraq or searching for Taxpayer 309-51-3272 whose identity got blurred by lack of current information and a database glitch. Friends and family are much sterner foes than bonehead government. Anarchy means standing on your own two feet, no obligations. None. Paradoxically, all this can be and must be achieved in the comfort of your own living room, no matter which brain you pilot solo into the great Unknown. Anarchists are people. We find it easy and natural to fall in love, laugh, conceive kids, work for a living, keep pets, chat with neighbors, watch TV, and everything else that normal people do. No one begins life ex nihilo or sprung from the head of Zeus fully armed. Life is a series of challenges and blunders mixed with difficult decisions. No matter where you start, no matter who clings to your emotional jacket sleeve, the core issue is always autonomy and moral independence. "The moral is the chosen, not the forced." [Ayn Rand]

------------------------

I know this doesn't put money in your pocket today. But it gives you permission to think freely and clearly, so you can drop a bunch of unwanted, unpayable obligations and move forward.

:thumbsup:

[galtgulch]

I promised that I would post something on the topic of what to do, if you have limited income, no savings, big bills, unpayable debts. First, I want to assure you that I understand the situation. ....

:thumbsup:

Well said!

In addition I would help choose delegates to the Republican Party nominating convention who are in favor of Ron Paul, who despite his flaws, would try to restore our Constitutional republic and stop the inflation and establish sound currency based on gold and silver coin as the Constitution requires.

Visit www.ronpaul2008.com, the official website to explore his positions on issues. Visit www.dailypaul.com to keep up with the grassroots activities. For example 274 folks showed up in Missouri at a republican caucus and 241 of them were Ron Paul supporters! The same sort of thing is happening in Alaska, Nevada, Texas, etc.

If by some chance Ron Paul's grassroots advocates succeed in making him the nominee in September, donate to his campaign to help get his message out to help him get elected.

The broken bell will ring!

Wm

[Brant Gaede]

GG: Why are you posting this here? Have you asked Ron Paul to send me money? I'll use it the same way: to support my lifestyle.

--Brant

[galtgulch]

GG: Why are you posting this here?

--Brant

To help save the country!

[Aggrad02]

GG: Why are you posting this here?

--Brant

To help save the country!

Galt,

I agree with Brant. I love Ron Paul and have worked my ass off for him, but bring him up in sections where it is not appropriate will just anger people instead of intriguing them. Also OL is a small community. Just about any post you make in the appropriate section (Stumping in the Backyard) will more than likely be read by everyone.

Just my 2 cents.

--Dustan

[Wolf DeVoon]

Non-borrowed bank reserves chart.

(chart is on a dynamic page, so I can't call it here, link works okay)

Bank reserves evaporated in 2008, negative according to Fed data.

Edited March 29, 2008 by Wolf DeVoon

[sjw]

Pre-Nazi Germany: "In case of emergency, add more statism."

http://www.cnn.com/2008/US/03/28/financial...ight/index.html

How easily this passes is a measure of how much trouble we are in, and not just financially.

[Brant Gaede]

I have the bad feeling that most of the liquidity being injected by the Fed into the economy is being used by banks to shore up their reserves. The next time I buy gold is after a 20-30% correction. No commodities. Out of most stocks. Out of foreign currencies. Out of bonds. I'm getting ready to go short. Cash is king. Even stock brokers are going to be dangerous. FDIC protected accounts are the safest place for cash. And short-term Treasuries. It's going to be a long time for there to be transparency in financials and concomitantly for the real estate situation to stabilize. I cannot think of anything to move the stock market higher until then. We are entering some kind of economic contraction and the beginning of speculator hysteria for being stuck in long commodity positions. (In regard to this last, see the current "Barrons.") If I had stocks I wanted to keep regardless, I'd have my broker send me the certificates and place them in a bank's safe-deposit box.

--Brant

[Wolf DeVoon]

Financial contagion spread to The Ritz in London at the weekend when the Queen marked herself to market and decided it would be “inappropriate” to hold a party to celebrate her diamond wedding when the country was on the brink of recession. (FT Alphaville)

Brant has the right idea. Cash til further notice.