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- From: "Tradingpost" <tradingpost@lobo.net>
- To: livingontheland@lists.ibiblio.org
- Subject: [Livingontheland] The New Paranoia
- Date: Tue, 13 Jan 2009 17:09:31 -0700
I hesitated to send this on but to me it's a sad example of what the
terminally clueless think.
paul tradingpost@lobo.net
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The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable
Lifeboats
http://nymag.com/news/features/all-new/53372/
* By Timothy Sohn
* Published Jan 11, 2009
During the final months of 2008, as the financial markets imploded, talk on
trading desks turned to food and water stockpiles, generators, guns, and
high-speed inflatable boats. The system really was about six hours from
failing, says Gene Lange, a manager at a midtown hedge fund, referring
to the week in September when Lehman went bust and AIG had to be bailed
out. When you think about how close we were to the precipice, I dont
think it necessarily makes a guy crazy to prepare for the potential
worst-case scenario.
Preparations, in Langes case, include a storeroom in his basement in New
Jersey stacked high with enough food, water, diapers, and other necessities
to last his family six months; a biometric safe to hold his guns; and a
1985 ex-military Chevy K5 Blazer that runs on diesel and is currently being
retrofitted for off-road travel. He has also entertained the idea of
putting an inflatable speedboat in a storage unit on the West Side, so he
could get off the island quickly, and is currently considering purchasing a
remote farm where he could hunker down. If theres a financial-system
breakdown, it could take a year to reset the system, and in that time,
whats going to happen? asks Lange. If New York turns into a scene out
of I Am Legend, he wants to be ready.
Hes not the only one. In his book Wealth, War, published last year,
former Morgan Stanley chief global strategist Barton Biggs advised people
to prepare for the possibility of a total breakdown of civil society. A
senior analyst whose reports are read at hedge funds all over the city
wrote just before Christmas that some of his clients are so bearish
theyve purchased firearms and safes and are stocking their pantries with
soups and canned foods. This fear is very much reflected in the
marketprices of corporate bonds have been so beaten down at various
points that they suggest a higher default rate than during the Great
Depression. Meanwhile, while the overall gold market has fluctuated, the
premium for quarter-ounce gold coinsmeaning the difference between the
price for gold you can hold in your hand and that for paper gold,
such as exchange-traded fundsrose to an all-time high of 20 percent.
Gold is transportable, its 100 percent liquid, and its perfectly
divisible in the context of ounces, bars, or coins, says the head of a
California research firm who keeps a supply of it, along with food, water,
and guns, on hand. And most important, theres no
counterpartyi.e., its an investment beholden to no one, and
perhaps one of the few assets that will retain value if the financial
system collapses.
While it may look like these Wall Streeters are betting on such a collapse,
their embrace of survivalism is an outgrowth of their professional habits
of mind: Having observed the economys shaky high-wire act from their
ringside seats, they are trying to manage their risk and hedge
against a potential fall. Its like insurance, says an investor who
has stockpiled MREs and a hand-cranked radio. And by the time you need
it, its way too late. Leave it for others to weep for the collapse of
the social order. These guys would prefer to be in a high-speed boat or
ex-military vehicle, heading off toward their fully provisioned compounds
in pursuit of the ultimate goal: to win the chaos.
- [Livingontheland] The New Paranoia, Tradingpost, 01/13/2009
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