• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Barry Sternlicht Warns "Everyone Is Holding Cash Because They Know When It Ends It's Gonna Get Ugly"

Tyler Durden's picture




 

"The Fed is playing a very dangerous game," Starwood Capital's Barry Sternlicht warns,"and they need to stop." Sternlicht has quadrupled his firm's net worth in this time and, to the incredulity of the CNBC anchors, warns, "this is bad, this is a heroine addiction.. and now they are printing more money than the deficit." The outspoken CEO of the $29 billion fund, noted "all my friends who are money managers.. are much closer to the sell button than they ever were before," adding that "everyone's holding cash," since if they start to get nervous "volatility will come back instantly." Simply put, he concludes, "you know when this ends, it's gonna get ugly."

On Fed QE and investors' heroin addiction:

"they should knock this off. This is bad. This is a heroin addiction. The more you get on it, the worse it's going to get; the more asset values inflate."

 

 

Further to Sternlicht's point that "you're gonna hold cash",

A new survey of family offices by Citi finds that the wealthy are cash heavy—meaning they may fall short of the investment returns they're expecting.

 

Wealthy families have about 39 percent of their assets in cash, according to a recent poll of more than 50 large family office representatives from 20 countries conducted by Citi Private Bank.

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Tue, 11/05/2013 - 11:56 | 4122884 FieldingMellish
FieldingMellish's picture

If "everyone" is holding cash... cash will plummet.

Tue, 11/05/2013 - 11:59 | 4122897 firstdivision
firstdivision's picture

Hey, that's a bit unfair.  It'll be worth as much as toilet paper.

Tue, 11/05/2013 - 12:02 | 4122914 duo
duo's picture

get some of those new Franklins while they're fresh

Tue, 11/05/2013 - 12:10 | 4122935 Deo vindice
Deo vindice's picture

I'm not "holding cash" but what I do have is certainly not in the system.

What with zero interest rates and the very real possibility of bail-ins, their is no upside and lots of downside to keeping your savings in a bank.

Tue, 11/05/2013 - 12:14 | 4122958 duo
duo's picture

The last two times I got cash at the bank, every bill was new, with sequential serial numbers.  Somebody is printing like crazy...

Tue, 11/05/2013 - 12:23 | 4122987 Truthseeker2
Truthseeker2's picture

 

***Even CASH will be worhtless when this goes down ... and there's no stopping it from going down --->

^

"Global Financial Architecture and Economic Systems on Verge of Collapse" 

http://stateofthenation2012.com/?p=2200

^

 


 

Tue, 11/05/2013 - 12:35 | 4123051 Pairadimes
Pairadimes's picture

Hmm. Hold currency, or hold money. I think I will hold money.

Tue, 11/05/2013 - 13:28 | 4123236 ATM
ATM's picture

You had better hold both. currency is going to be of very good use for a while as others scramble to sell their money and assets for it.

Then it will become useless as everyone is flooded with currency and no one will be willing to trade money or real assets for it.

It will be about timing.

Tue, 11/05/2013 - 13:46 | 4123295 zaphod
zaphod's picture

This.

The system is setting us up for another muppet killing, just as in 2001 and 2008. The retail muppets will get wacked again and the wealthy will be there to buy everything on the cheap.

I'd like to say that this is the one last time they will be allowed to get away with it, but sadly we all know this will not be the last muppet slaying, there are many more to come.

But its time to stop blaming the wealthy. It is the retail muppets own fault for falling for this again and again and again. What is the saying, fool me once shame on you, fool me twice shame on me?

Tue, 11/05/2013 - 13:58 | 4123363 Fukushima Sam
Fukushima Sam's picture

Fool me fifteen times, I'm a slave?

Tue, 11/05/2013 - 16:52 | 4124033 fockewulf190
fockewulf190's picture

Next time won´t just wipe out the last of the muppets, it will be taking out the Jim Hensons of the world as well. 

Tue, 11/05/2013 - 12:36 | 4123052 FEDbuster
FEDbuster's picture

Best to be out a little early, rather than a little late.

Tue, 11/05/2013 - 12:37 | 4123054 Herd Redirectio...
Herd Redirection Committee's picture

Electronic cash will be worthless in an extended power outage (November 13, 2013, here's looking at you).

Paper cash will have at least SOME barter value, although expect the price of goods to be at least double, if the power is out indefinitely.  Of course, the sharper won't accept paper cash at all, for large purchases.

Gresham's Law says if people accept toilet paper as barter, you should keep some toilet paper/fiat on hand, to barter with.

Tue, 11/05/2013 - 12:59 | 4123124 Oldballplayer
Oldballplayer's picture

I said this on another forum:  We bitch an moan because the government doesnt seem to be prepared for an EMP attack or a CME.  OK, thats fine. 

But when they actually set up a test to show that they ARE considering the implications, people bitch about it being some false flag bullshit to lead to martial law.

Anyone that believes a country with this much land, this many people, many of whom have lots of guns,and an Army made up of mostly decent kids is going to fall to martial law is not spending much time thinking this thing through.

I am EMP possible?  Sure.  So isnt a massive solar flare. Its important to consider that in any emergency planning.

Is the same government that launched Obamacare.gov going to pull off the biggest round up since that French king went all Godfather Christening on the Knights Templar?  I really rate that as a low, low probability on the "oh shit" scale.

Sometimes a cigar is just a cigar.

Tue, 11/05/2013 - 13:36 | 4123258 indygo55
indygo55's picture

An EMP attack, whether from the sun or a nuke set off 50,000 feet up would change things in the US in one second forever. No mutual funds or retirement accounts would matter at that point. Could it happen? Absolutely.

 

Not that I am a big fan of Gingrich but even he has been writing about it. So much has been written about the possibility of such an attack and who might do it. Little has been done to prepare for such a possibility. The population would go below 10% in a year. 

 

Gingrich suggested that an EMP attack would “throw all of our lives back to an existence equal to that of the Middle Ages.”

“Millions would die in the first week alone,” he wrote in the foreword of the novel released in 2009.

Read more: http://www.politico.com/story/2013/06/electromagnetic-pulse-newt-gingrich-emp-attack-93002.html#ixzz2jnF1qwAE

Tue, 11/05/2013 - 13:42 | 4123291 Quus Ant
Quus Ant's picture

I'm long long underwear. 

Tue, 11/05/2013 - 14:04 | 4123387 Herd Redirectio...
Herd Redirection Committee's picture

"lead to martial law."

Who said  it would lead to martial law?  I know people have said it would lead to chaos...  And order out of chaos is not exactly a new 'strategy'.

Tue, 11/05/2013 - 14:25 | 4123472 chubbar
chubbar's picture

Anyone taking odds that IF an EMP or Sunshot occurs that the members of congress will just happen to be in their fully equiped/ stocked bomb shelters, built courtesy of the taxpayers of this country, while the majority starve to death?

Tue, 11/05/2013 - 14:02 | 4123382 Fukushima Sam
Fukushima Sam's picture

Somehow he forgets to mention that all the nuclear power plants would no longer be able to cool their cores and spent fuel pools and would melt down, making the entire planet uninhabitable for humans.

Tue, 11/05/2013 - 17:21 | 4124182 fockewulf190
fockewulf190's picture

Odds of another Carrington Event happening is 100%...and we are already overdue. 

Tue, 11/05/2013 - 14:06 | 4123401 InflammatoryResponse
InflammatoryResponse's picture

Far worse than the middle ages.  simply because so many people NOW wouldn't have clue ONE of what to do with or for anything.

 

quite scary.

 

I think I'll order more ammo.

 

Tue, 11/05/2013 - 14:06 | 4123400 kchrisc
kchrisc's picture

Time to fight.

First things first: Just stop paying, obeying and playing with these criminals. One day you won't be able to pay the banksters and their pol and crat puppets anyways, so quit paying them now. Put it in gold, guns and grub and prepare. Tell them all to get bent. Quit playing their game and being their pawn and beast of burden. This includes all the divisive "issues" they use to divide us.

Next, get ready, as they are coming for us. Your federalized 'local' police force is evidence of this. There will be blood, whose it will be is up to you.

Those responsible for the current condition of the American people must be punished and eliminated from a restored civil and Constitutional society. Those that have committed treason and those that have stolen from the American people need to be purged, unless one can think of a possible productive position for them.

The Constitutional republic should be restored. Just go back to what we had. No need to reinvent the wheel. "Fixes" and modifications can proceed from there.

The Four Rs
Rejection: Quit paying, quit obeying , quit playing
Revolution: It is inevitable, so prepare, as they are.
Retribution: Is there really any place for these sociopaths and criminals in a restored civil and Constitutional society?!
Restoration: Restore the Constitutional republic.

Tue, 11/05/2013 - 17:17 | 4124158 TheReplacement
TheReplacement's picture

So you still believe Obamacare was supposed to work?  Wow.

Tue, 11/05/2013 - 20:36 | 4124118 Radical Marijuana
Radical Marijuana's picture

Good article, Truthseeker2. I liked the embedded cartoon of Obama's Yes we (kick the) can!

However, as does this Zero Hedge article above, it grossly underestimates how OUT-OF-CONTROL the established systems have become, which are trillions times worse than people can understand or rationally deal with anymore. The basic reasons are that the whole social pyramid system is based on FORCE BACKED FRAUDS, that were able to grow exponentially for quite a while. However, those STILL cruise on top of "credible threats" which have actually become utterly irrational. and more insane than can be comprehended.

The global systems are electronic FRAUDS, backed by the FORCE of weapons of mass destruction, which are able to destroy trillions of times more than anything before in human history. The proverbial house of cards was built on a foundation of dishonesty, backed by violence: from gold and silver coins backed by swords and spears, to paper representations of gold and silver, backed by rifles and cannons, to electronic forms of faith-based money, backed by really nothing but weapons of mass destruction. Paradoxes arise from weapons of mass destruction becoming trillions of times more powerful, and therefore, theoretically being able to murder quadrillions of people, in order to back up the gambling with the multiplicity of faith-based currencies, and their derivatives, which also now represent even more ridiculous quadrillions of units, all of which together are orders of magnitude greater than the supposed collateral hypothecated to back them up.

The breakthroughs in basic science and technology have enabled the social pyramid systems of Neolithic Civilization, which were based upon lies backed by violence, by which small groups worked hard to make sure everyone else can be controlled through fear and ignorance, to grow to become trillions of times bigger than ever before in human history. THERE IS NO SANITY WHATSOEVER LEFT IN THE CURRENT SYSTEMS OF BACKING UP FRAUD WITH FORCE! The previous human history of thousands of years of being able to operate organized systems of lies, to run organized robbery, in which their back-up was being able to kill those who would not agree, NO LONGER MAKES ANY SENSE, BECAUSE THE BACK-UP SYSTEMS OF THREATENING TO USE WEAPONS OF MASS DESTRUCTION IS NO LONGER SANE, SINCE NOBODY CAN WIN THE WARS ANYMORE. But nevertheless, we cruise on the established social habits, which were built upon a foundation of being able to back up frauds with force, for thousands of years ... which have been growing at an exponential rate, with recent times revealing what an exponential growth curve of financial frauds, backed by force, looks like, with the numbers intrinsic to the debt slavery being driven to manifestly become debt insanity.

All the while, the same ability to back up being dishonest by being violent has been enabling that social pyramid system to continue to grow bigger and bigger, until its current proportions are so ridiculous, that only apparently absurd cartoons can illustrate what that actually looks like. Therefore, it is not merely the "Global Financial Architecture and Economic Systems on Verge of Collapse."  The basic structure of Neolithic Civilization, of being able to successfully back up lies with violence, is on the verge of collapsing. The basic social pyramid systems of slavery were based on being able to credibly threaten "Do what I say, or I will kill you." However, after the development of weapons of mass destruction, that foundation has become "Do what I say, or I will kill almost everyone, probably including myself too."

THEORETICALLY, the way that the philosophy of science manifests through political science and the combined money/murder systems ought to go through profound paradigm shifts. Our human ecology and political economy ought to go through paradigm shifts at least as profound as those which basic sciences did, which made atomic bombs and electronic communications become possible. However, in practice, that is pretty well totally impossible, and therefore, it seems a waste of time to bother to point that out, since the vast majority of people will continue to deliberately ignore that point of view, while those benefiting from the established systems will continue to double down on their established systems of force backed frauds, despite those becoming exponentially more insane every day. Therefore, I usually find that it merely tickles my increasingly macabre sense of humour to watch little videos like the one above, where someone who has a claim over supposedly tens of billions of units of the fraud, backed by force, suggests that, despite his own claims doing well, the overall systems are going too far. Similarly, the article that you linked above, Truthseeker2, is still orders of magnitude away from the magnitude of the real problems with a globalized system of electronic frauds, backed by atomic bombs.

The only genuine solutions would require the combined money/murder systems, operating the established ways that the debt controls are backed up by the death controls, being transformed in ways similar to how the basic sciences and technologies that made electronics and atomic power become possible in the first place. However, obviously, NONE of that is present in any publicly significant ways. Instead, we are rushing faster and faster towards some collapses that are crazier than we can comprehend. The frauds will eventually be backed up with force, in ways that fail to work on a more spectacular scale than we can currently imagine. Since the basic structure of the established systems is denied and suppressed, and almost all of the controlled opposition to those established systems tend to promote the same kinds of false fundamental dichotomies, and impossible ideals, as somehow what should provide the inspirations for resolving these problems, there is practically nothing in the public world that admits the facts, and bases solutions upon those facts, that the government is organized crime, controlled by the best organized gang of criminals, and that the only way to resolve the combined runaway debt/death control insanities is by understanding the deeper purposes WHY, and developing better ways to accomplish those purposes.

Everything that I have learned about how these human systems really work has made me become mostly convinced that it was a waste of time to bother to learn about them, since they almost totally operate on the basis of deliberate ignorance, and therefore, no evidence, and no logical arguments, actually matter to those established runaway systems of organized lies, operating organized robberies. The FACT that the FRAUDS are now backed up with the FORCE of weapons that are trillions of times BIGGER, makes no difference to the ways that the vast majority of people think. Since the whole world is being controlled by systems of legalized lies, backed by legalized violence, wherein the vast majority of people do not understand that, and do not want to understand that, while those most operating those established systems most refuse to face those facts, and most want to not understand that, and most want other people to not understand that, it appears to have been a silly waste of time to attempt to understand those things any better, and appears ridiculous to bother communicating about those basic social facts. It is like attempting to do social psychiatry inside of an insane asylum, which is being run by the most criminally insane people, while almost all the other inmates run the gamut of different kinds of insanities as well.

Wed, 11/06/2013 - 08:39 | 4126233 macbone
macbone's picture

You see it's people like RM here who make me distrust pretty much everything on this weirdo site. Some, no make that most of you, seem a
little bit too enthusiastic about the coming economic apocalypse.

Tue, 11/05/2013 - 12:33 | 4123036 El Oregonian
El Oregonian's picture

Yes! And mine were still warm and fresh as if they were straight from the presses. And they fit perfectly on their counter. Go figure...

Tue, 11/05/2013 - 12:20 | 4122977 Peter Pan
Peter Pan's picture

The scariest bit is that virtually everyone with money in the bank doesn't realse that the money is not there unless they happen to be amonst the first to withdraw.

Tue, 11/05/2013 - 12:24 | 4122997 oddjob
oddjob's picture

In the dash for cash, the printing has just begun.

Tue, 11/05/2013 - 12:38 | 4123059 Wahooo
Wahooo's picture

If the wealthy are hoarding cash, why would I want to?  Shouldn't I be hoarding the things they will want to buy with that cash so I will have it when they wipe out supply?

Tue, 11/05/2013 - 12:57 | 4123120 G.O.O.D
G.O.O.D's picture

Why would you want it? THINGS will be worth something, cash-- not even if the blackout is over a week long.

Tue, 11/05/2013 - 13:14 | 4123185 Dick Buttkiss
Dick Buttkiss's picture

The wealthy aren't holding cash; they're holding digits, everyone of which (and there are trillions out there) is a claim on a physical dollar.

So along with PMs, you should be hoarding hard cash in small denominations (e.g., 20s), including lots of nickels — http://archive.lewrockwell.com/orig13/hathaway2.1.1.html — which everyone's familiar with and will be very spendable once it's clear that their metal content turns them into "poor man's gold."

Tue, 11/05/2013 - 12:48 | 4123087 Shizzmoney
Shizzmoney's picture

It not *if* they bail-in, but *when*.

Although, unlike Cyprus, we here in America have a special deterrent that will make things very interesting when they do try to bail-in....and that my friends, are called: "guns".

Tue, 11/05/2013 - 12:56 | 4123116 NIHILIST CIPHER
NIHILIST CIPHER's picture

Don't worry that cash they are "holding" will be snatched out of their hands quickly, you know to buy that $50 loaf of bread and that $40 gallon of gas. Then they will need moar.

Tue, 11/05/2013 - 13:12 | 4123170 Taffy Lewis
Taffy Lewis's picture

Deo vindice,

I hold cash because I believe it's the least worst option. I sprinkle my savings in chunks in local credit unions and banks within walking distance of my house; I also keep a percentage in phyzz as an insurance policy. I am calculating that before a currency crash or devaluation or hyperinflation, there will be a window that depreciated assets can be bought with my cash which will make up for the 5-10% that I am losing annually by having it parked there... Is this a wrong approach?

Tue, 11/05/2013 - 14:11 | 4123207 NIHILIST CIPHER
NIHILIST CIPHER's picture

During the night while you slumber, the crafty banksters will declare a bank holiday. You awake to an " OH SHIT" moment  that you can only withdraw 100 dollars a day from the ATM but it was out of cash before you WALKED to the bank and the BANK IS LOCKED UP TIGHT AS A DRUM. As Buckwheat would say, PHYZZ is O'TAY.

                                                                                                                     @TaffyLewis                          

Tue, 11/05/2013 - 14:13 | 4123427 Taffy Lewis
Taffy Lewis's picture

Thanks for the advice. Perhaps a small fire-proof safe is in order.

Tue, 11/05/2013 - 14:13 | 4123426 lasvegaspersona
lasvegaspersona's picture

D v

I gave you an up arrow but I think if they did bail ins in the USA that it would be game over.

We print the reserve currency and we can always keep things nominally good. To fail at that would simply be incompetence.

Other countries HAVE to do bail ins because they can't just print. We can and I suspect we will.

Tue, 11/05/2013 - 12:18 | 4122974 GubbermintWorker
GubbermintWorker's picture

Why, is it a softer two ply?

Tue, 11/05/2013 - 12:46 | 4123085 Mike in GA
Mike in GA's picture

What's this Franklin you speak of?  I see only George and Abe.

Tue, 11/05/2013 - 12:15 | 4122962 JerseyJoe
JerseyJoe's picture

Confetti swept from the streets. 

Tue, 11/05/2013 - 12:23 | 4122985 JerseyJoe
JerseyJoe's picture

and let's not forget about "cash" last go-round...

NEW YORK, Oct 9 (Reuters) - Twenty-eight U.S. money market funds, instead of just one, could have collapsed during the height of the global credit crisis in 2008, underscoring the severe distress in credit markets following the collapse of Lehman Brothers, according to a blog post from the Federal Reserve of New York.

The funds' losses were "obscured" because their parent companies absorbed them, four Fed analysts wrote on Wednesday in an entry for the bank's Liberty Street Economics column.

In 2008, the Reserve Primary Fund was the only money fund whose share value dropped below one dollar, or "broke the buck," due to its heavy exposure to Lehman's debt securities.

The collapse of the Reserve Primary Fund was a watershed moment during the financial crisis. It nearly froze money markets and led the Fed and other major central banks to embark on unprecedented action to flood cash into the banking system.

Regulators have been implementing a series of moves to toughen oversight of money funds since the crisis in a bid to avert another fund collapse.

In their blog post, Marco Cipriani, Michael Holscher, Antoine Martin and Patrick McCabe wrote: "at least twenty-nine MMFs had losses large enough to cause them to break the buck in September and October 2008 despite significant government intervention and support of the sector."

Five funds or more posted losses exceeding the 3 percent reported by Reserve Primary Fund, and one fund reported a loss of nearly 10 percent.

"Among the twenty-nine funds that would have broken the buck without sponsor support, the average loss was 2.2 percent," the Fed analysts wrote.

"Yet, the losses for twenty-eight of these (money funds) may have gone unnoticed during the crisis, as neither their shareholders nor almost anyone else could have observed their magnitudes at the time," they said.

The blog post did not name the other 28 funds that could have broken the buck.

 

Tue, 11/05/2013 - 13:41 | 4123277 Alea Iactaest
Alea Iactaest's picture
After a number of years of relatively benign conditions for fund-raising, exits and private equity’s growth as an asset class, 2013 has seen a pick up in both the outlook for realisations, the ability for GP’s to raise additional funds and a reduction in the global level of dry powder. Corporate cash levels remain high, the cost of debt remains very low, and liquidity in the secondary market appears to be improving. In aggregate, funds in our universe have been posting positive unrealised gains, and the weighted average maturity of vehicles’ investments continues to rise. The resultant impact on turning unrealised profits into gains on exits and favourable cash on cash returns should continue to flow through to NAV’s and ultimately share price returns for investors. Source: Liberum Capital, Direct Private Equity market update, 05 November 2013
Tue, 11/05/2013 - 13:51 | 4123327 ceilidh_trail
ceilidh_trail's picture

+1 Nice heads up. Just have to look at what your mmf actually holds. Safer ones stick with vst treasuries and NO derivative crap. They pay nothing, but should be safe. 

Tue, 11/05/2013 - 12:48 | 4123091 RaceToTheBottom
RaceToTheBottom's picture

Bullish no paper toilets.  The best Japanese invention, ever.

Tue, 11/05/2013 - 14:37 | 4123514 Never_Put_Down
Never_Put_Down's picture

With all the money printing, I bet my ass that toilet paper is the better long term asset of the two.

Tue, 11/05/2013 - 14:37 | 4123515 Never_Put_Down
Never_Put_Down's picture

With all the money printing, I bet my ass that toilet paper is the better long term asset of the two.

Tue, 11/05/2013 - 12:30 | 4123027 slaughterer
slaughterer's picture

The system can stay addicted to monetary heroin longer than Barry Sternlicht can imagine.   He is just another rational hedger getting burned up by his hedges, and he wants the heroin feed to get closed so that he can make even MOARER money with his volatility longs.  Yet another douche.  Going on CNBC you are branded a douche for life in my perspective.   If a Tyler ever appears on CNBC, I close my acct here for eternity.   

Tue, 11/05/2013 - 12:33 | 4123046 fonzannoon
fonzannoon's picture

I would even go so far as to sell some of my paper gold if Tyler went on there.

Tue, 11/05/2013 - 12:56 | 4123101 Marco
Marco's picture

Rational hedger? They invest in real estate ...

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