"Sell everything" says Scottish National Bank

[GatorFarmer]

Markets are heading for a 'cataclysmic year' in 2016, warns RBS - Jan. 12, 2016

Reassuring financial advice referencing terms like "cataclysmic" and "total collapse".

I was surprised that it suggested high quality bonds and not shotguns and canned goods.

It mentions an outflow of Chinese capital into the dollar, wouldn't that, in theory, be good for the American economy, but bad for everyone else?

 

[Marine Corps Air]

If I am interpreting this news correctly, Chinese investors are skeptical of the stability and growth of their own economy (sound familiar?). Instead of investing in their own Chinese firms, business operations etc. they have moved it offshore and have bought U.S. currency. Businesses have three primary sources of capital - 1) investments in the marketplace, 2) debt, or 3) additional investments from the owners.

The Chinese economy needs the capital investments (#1) to continue to grow and expand.

Evidently, this has been occurring since the second quarter of 2014 and does not appear to be declining. The situation is more complex and far-reaching than I have included in my comments above.

"The Chinese capital outflow picture appears to have entered a new phase in [the third quarter], broadening to include foreign direct investment and portfolio instruments, something that could make future capital outflows practically boundless," (JPMorgan: Potential Capital Outflows From China Have Become 'Practically Boundless' - Bloomberg Business )

 

[Irn-Bru]

So far stocks have had a woeful start to the year. Might not be a bad idea to invest in some PM's. I like the look of silver but more so platinum.

 

[LoboGunLeather]

I suspect that those recommending that we sell everything will include those who will be buying at rapidly dropping prices, then there will be a market correction that benefits those few who invested while we divested.

I prefer to listen to those financial professionals who have managed my investments for decades, producing strongly positive results over time, rather than react to those who scream that the sky is falling every day or so.

 

[Onomea]

It mentions an outflow of Chinese capital into the dollar, wouldn't that, in theory, be good for the American economy, but bad for everyone else?

It would not be good for the US economy in the sense that as the dollar strengthens, our exports lose price competitiveness. (So selling Boeing planes overseas gets harder, and Boeing workers get laid off, for example.)

If you are in the business of importing Chinese or other foreign goods, a stronger dollar makes foreign goods cheaper, allowing you, in selling to American consumers, to increase your profit margin or sell more by reducing prices.

For someone like me, who mostly lives abroad and has a mostly dollar income, it is largely a good thing.

It is a balancing act, and even experts don't agree on what the currency exchange rates should be, ideally.

Not that I really understand it, of course. (Brings to mind the old saw, "If economists are so smart, how come they aren't rich?")

 

[venomballistics]

sounds like the incoherent rambling alarm of someone who has no idea what they are doing.

 

[JSR III]

I always have to laugh at those folks that will say when the market dips, "Oh my god, I lost $50,000 in the market this week".

No you didn't, your portfolio may have gone down, but unless I'm missing something, unless you sell or sold, you haven't lost anything.

 

[chud333]

Not a problem. Just print more money....
Heavy Sarcasm...




Chuck

 

[old bear]

Chuck, how about instead of PRINTING more money, we return to stamping out real gold and silver currency?

 

[THE PILGRIM]

Not sure exactly who is this Scottish National Bank is.
Don't really matter, if you can't afford a dip in the market-
You should not be in the market!
I'm not talking about not liking a dip, I mean you can't afford a dip.
The only folks who want the market to go down are the short sellers.

 

[ladder13]

If that's true then get on the bread line now, before everyone else.

 

[Comrad]

The problems that lead up to the 2008 crash are still in play and significantly worse with the Chinese bubble about to pop.
More than one well respected analyst has predicted a 2016 crisis.
I'm prepping.
If I'm wrong, I have a good supply of canned goods and ammo.
If I'm right, I have a good supply of canned goods and ammo.

 

[wbraswell]

The SNB can go chew on their kilts. They ain't getting my money. Economic doomsayers are just like the religious doomsayers. They've been around for centuries.

 

[pharmer]

Not a problem. Just print more money...Chuck

That IS the problem. Joe

 

[calmex]

So. I'm just starting to have this dawn on me here; you're saying that the Stock Market is not some place you can go to buy decent wood for your rifle? Wow. Who'd have thunk it?

Now I know what they mean when they say "I've got nothing in the market." Like me. I've got nothing in the market.

 

[LostintheOzone]

I'm down here in AZ soaking up the sun. The Canadian snowbirds just aren't here like they were last year. The locals are already worried that they're going to suffer because of it.

That reminds me. I need to check my accounts. I'm probably already wiped out for the 3rd time in my life.

 

[glenwolde]

This is the Royal Bank of Scotland (RBS). The same guys that were so astute during the 2008 crisis that the British government had to take an 81% stake to keep them from going belly-up.

 

[Onomea]

Interesting chart here on government bailout of banks as a percent of GDP in 2008: Government Bailout of Banks as a Percentage of GDP | Seeking Alpha

It ain't pretty.

 

[dmar]

Interesting chart here on government bailout of banks as a percent of GDP in 2008: Government Bailout of Banks as a Percentage of GDP | Seeking Alpha

It ain't pretty.

No, it really is not pretty... One big issue I have with this chart is the term "Government Bailout." We all know that the government enacted the bailout, but make no mistake, it as a TAXPAYER bailout. Our money, the 'government' doesn't have any of its own money, just ours.

Their debt is our debt/problem. I firmly believe that the banking system is set up for these "crisises," and related "bailouts." It's a guaranteed way to shift more of our taxpayer money to these giant corporate banks. Incredible sums of money involved. Think about this! And funny, you don't hear a peep about the record corporate/banking profits that have been enjoyed over the past several years. I know I didn't see any payback from these bailed out corporations. They've been making an absolute fortune. What a scam, a beautiful system if you are one of them...

Another thought on a potential crash in 2016 is that when interest rates start to rise, the financial burden that the US will have just to cover the interest payment on all of this debt, the incredible amount of money that has been printed over the past 8 years, will be overwhelming; literally. We will not have the horsepower to carry that load. And yes, we will all be on the hook for it. Should be interesting...

 

[chaparrito]

Because Scotland; one of the world's great economic powers, knows best?