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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 - 14:08 | 4123405 therevolutionwas
therevolutionwas's picture

To those of little understanding it may seem like magic.  And they would not know how to work it.

Tue, 11/05/2013 - 12:28 | 4123017 What is The Hedge
What is The Hedge's picture

My concern is still the same as it has for some time. Before QE, anyone familiar with Fed policy would have said, "no way could the Fed print that much, and it couldn't be done." Well it has been done! My point? This Fed and USGov. have demonstrated they will do the unimaginable, so the future more than likely will include some other form(s) of heretofore unimaginable policy. All the fundamentals are gone and the rules have changed dramatically. Thus, my ID that I use here: What is The Hedge?

Tue, 11/05/2013 - 12:33 | 4123040 sockratte
sockratte's picture

one after the other... xD

 

but still they are too greedy to quit the markets, because this fed rallye could go on and on and on and on. its just not clear, when exactly this will end.

Tue, 11/05/2013 - 12:32 | 4123042 NEOSERF
NEOSERF's picture

Why do I have this vision of Gordon Gekko making calls to his hedgie buddies about WHEN to push the [coordinated] sell button???  Only if it is orchestrated can the 1% make money on this collapse.  Somewhere a Rothschild is smiling.

Tue, 11/05/2013 - 13:02 | 4123132 optimator
optimator's picture

Its complcated as they need to close the markets to the little people while they take theirs out. 

Tue, 11/05/2013 - 12:34 | 4123047 WhiteNight123129
WhiteNight123129's picture

Those guys are bad.

The guy manages 29 billion and does not know the difference between a bubble fueled by money and one fueled by credit. pityful.

When you have a bubble fueled by credit, hold cash because the credit is destroyed and the cash is king.

 

When you have a bubble fueled by fiat money, total different ball game, the vulnerability is not in the stocks (Zimbabwe) but in the cash itself and hte bonds. Hodl hard assets to protect yourself.

 

 

Tue, 11/05/2013 - 12:54 | 4123109 moneybots
moneybots's picture

"When you have a bubble fueled by credit, hold cash because the credit is destroyed and the cash is king.

When you have a bubble fueled by fiat money, total different ball game, the vulnerability is not in the stocks (Zimbabwe) but in the cash itself and hte bonds. Hodl hard assets to protect yourself."

 

The money is created through credit.  The national debt is at 17 trillion and growing.

 

 

 

Tue, 11/05/2013 - 13:46 | 4123307 zebrasquid
zebrasquid's picture

Which bubble? The bond market bubble, the stock market bubble,
The US Dollar (as Reserve currency) bubble?
They all will crash, some stocks will be the most resilient.

Tue, 11/05/2013 - 14:21 | 4123452 HardlyZero
HardlyZero's picture

So, some cash, some Gold, and anything else good like Silver or diamonds.

Then all the other good prepping things, food, water, salt, etc.   TP, and sanitary napkins gets soggy, and crackers get stale.

Canned goods are good long term.  Maybe few barrels of fresh potable water in the backyard or storage (ground floor only).

Its all in the timing.

Tue, 11/05/2013 - 14:12 | 4123422 Geruda
Geruda's picture

Too bad he lacks your wisdom.  Must be why he manages 29 billion and your wife has you managing getting the deposits on all your empty beer bottles.   

Tue, 11/05/2013 - 12:33 | 4123048 spanish inquisition
spanish inquisition's picture

I found a clip that sums up where we are from T2, just superimpose the Bernank's face over the characters. "I don't know how much longer I can hold this......"  

http://www.youtube.com/watch?v=6adb0yXGYV4

Tue, 11/05/2013 - 12:46 | 4123083 Marley
Marley's picture

The easiest form of manipulation is fear.  The second easiest is hope.

Tue, 11/05/2013 - 14:10 | 4123408 Geruda
Geruda's picture

The worst form of pollution is fear.   The folks hanging out in this sewer thrives on it.  Hope is the greatest falsifier of the truth.

Tue, 11/05/2013 - 16:35 | 4123971 akak
akak's picture

What was that you said again?  I find it very difficult to understand anything you are saying, what with you having Obamessiah's cock continually in your mouth.

PS: Does it, as I suspect, taste just like chicken?

Tue, 11/05/2013 - 14:26 | 4123476 Hongcha
Hongcha's picture

Marley; Greed is up there somewhere.

Tue, 11/05/2013 - 12:46 | 4123084 world_debt_slave
world_debt_slave's picture

yeah, paper wealth will vanish in a moment at some point in the future, look at Confederate paper currency, what's it worth today?

Tue, 11/05/2013 - 12:59 | 4123125 optimator
optimator's picture

I'll be you 10,000 Reichsmarks you're wrong!

Tue, 11/05/2013 - 16:42 | 4123949 Kirk2NCC1701
Kirk2NCC1701's picture

It's not ALL bad...

The closest I came to "issuing confetti money" (like bankers) was paying for a week-long yachting trip in the Adriatic, back in the 1980s, using Yugo Dinars.  Shit, we were literally throwing "Tito" notes (few pennies) at the kids, who were scrounging to clean the boat, or do other menial chores.  A week of insane indulgence and 'staying thirsty' cost each of us less than $200 (including EVERYTHING!).  Ah, I miss the "good old days" of socialism and lack of price discovery in Tito's Yugoslavia.  And all-cash, no paper or cyber-trail either, nor DUI or SUI (Sailing Under Influence) to worry about.  In fact, I'm hard-pressed to think when we weren't "tipsy", one two or three sheets to the wind.

Now... you gotta pay real market prices and minimum wages, and paper/cyber trails up the ying-yang for sin & fun in the sun.  Fuck that!

Based on this experience, I have a pretty good idea how those live who are "richer than you are*".  Guys like Jamie, Lloyd, Barry...

/sarc

* 2013 quote from Jamie Dimon: "... and that's why I'm richer than you are".

Tue, 11/05/2013 - 12:51 | 4123096 moneybots
moneybots's picture

"The Fed is playing a very dangerous game,"

 

They have been playing a dangerous game for a century.

Tue, 11/05/2013 - 13:05 | 4123152 withglee
withglee's picture

They have been playing a very profitable game for a century.

Tue, 11/05/2013 - 13:07 | 4123154 XAU XAG
XAU XAG's picture

@moneybots

 

Spot on comment

 

They upt'ed the anti in 1971

Tue, 11/05/2013 - 15:19 | 4123652 Kirk2NCC1701
Kirk2NCC1701's picture

If you did it, it's only dangerous if you get caught, prosecuted and convicted.

If you were on the receiving end, well, then it's just as dangerous as the slow-boil of the frog.

Tue, 11/05/2013 - 12:53 | 4123102 Oldballplayer
Oldballplayer's picture

Any fool can predict the failure of the currency.  The guys that can tell me when--before it happens--will be the guy I want to hear. 

Tue, 11/05/2013 - 13:10 | 4123166 XAU XAG
XAU XAG's picture

@Oldballplayer

 

It's happening now and has been for many years.

 

How much money did you earn in your first job?

 

Relate to something you knew the price off back then and it's cost now?

 

And tell me the currency has not already faild a long long time ago.

 

Tue, 11/05/2013 - 12:54 | 4123111 XAU XAG
XAU XAG's picture

It's been tough for the last 2 years being a gold/silver bug, but in 6-12-18 months time the sun will shine again.

 

I guess all those wealthy familys sold there paper gold when it first tanked and it is on the side lines waiting for the next up legg.

 

Funny that they maynot get to use it if " bailin happens " before!

 

I guess we all see it should callapse but just look at Japan.........this will go on for a long, long, long time untill it stops.

 

 

Tue, 11/05/2013 - 12:56 | 4123117 quasimodo
quasimodo's picture

But the new 100$'s are so purty, with the gold ink well on them. I'm told it has a hidden meaning that all is well?

 

Tue, 11/05/2013 - 13:02 | 4123134 Shizzmoney
Shizzmoney's picture

"Bernanke won't taper - that will be Yellen's problem"

#lol

Tue, 11/05/2013 - 13:10 | 4123155 Quinvarius
Quinvarius's picture

A short who will need a butthole transplant is all I see.  No grasp of history.  No understanding how the system works.  He is probably one of the clowns who thinks shorting PMs, well into a hyperinflation, and at their cheapest level vs the money supply in history, is a great idea.  You can't outsmart math.  No matter how hard the Fed tries, this ends only one way, and it is not with cash that is worth very much.

Tue, 11/05/2013 - 13:12 | 4123167 ThisIsBob
ThisIsBob's picture

Sooner or later perhaps these crash-and-burn guys may be right, but they have been wrong-wrong so far for the last 4+ years.  (You will notice they never tell you when to take the trade.)

Tue, 11/05/2013 - 13:10 | 4123168 justsayin2u
justsayin2u's picture

If its gonna get ugly why is the government buying up all the bullets?  Does Bamy have a "final solution" in mind?

Tue, 11/05/2013 - 13:13 | 4123173 q99x2
q99x2's picture

If everyone is hoarding cash and everyone is hoarding stocks and the property values in the wealthiest areas are being driven up. What's to worry.

Plus we have the FED and Wall Street and the Congress and Senate and Executive branches all raking in the dough things can't go wrong, at least not until the rest of the world realizes the threat and decides to take action.

Like with the buildup of nuclear armed Chinese and Russian subs. So until you see those mushroom clouds BTFD or BTFATH it doesn't matter.

We are all doomed bitchez.

Tue, 11/05/2013 - 13:14 | 4123183 Iam Yue2
Iam Yue2's picture

Another talking head.  If you are so concerned vis a vis your duty as a WEALTH PRESERVER, why don't you just go 100% cash, before the seemingly inevitable collapse.    #attentionseeker

Tue, 11/05/2013 - 13:15 | 4123192 NO SOLICITING
NO SOLICITING's picture

Where is Andrew Jackson when you need him?

Tue, 11/05/2013 - 13:17 | 4123195 uncle.bigs
uncle.bigs's picture

If everyone is holding cash, then there is nothing to sell.  They've already sold.  If there is nothing to sell, there will be no crash.  

Tue, 11/05/2013 - 13:20 | 4123201 Seal
Seal's picture

the really sad thing is the Fed is certain they are and have been doing the right thing. The thing that pisses me off is no one, NO ONE at the Fed has any of their own skin in the game. Govt. salary, pension, special health care plan, ABSOLUTELY NO RISK  no matter what happens to the markets, investors, citizenry in general. 

Tue, 11/05/2013 - 13:20 | 4123202 natty light
natty light's picture

Did they remove this video?

Tue, 11/05/2013 - 14:24 | 4123460 HardlyZero
HardlyZero's picture

from above thread...

This appears to be working for the moment:    http://www.cnbc.com/id/101170641

 

Tue, 11/05/2013 - 13:30 | 4123241 Elliptico
Elliptico's picture

Holding cash means digital credits in low yielding, highly liquid (so far) accounts.  For me, it's stacks and stacks of 20's buried in the backyard.  Hee, hee. 

Tue, 11/05/2013 - 13:34 | 4123254 NO SOLICITING
NO SOLICITING's picture

Better look out for the Feral Hawgs.  They have a nose for STUFF like that.

Tue, 11/05/2013 - 13:35 | 4123251 AON
AON's picture

Holding cash??  LMFAO!  Record margin debt?  Does that sound like everyones holding cash???  He's right about one thing though, it ends ugly.

Tue, 11/05/2013 - 13:35 | 4123253 Hanging Harry
Hanging Harry's picture

We've seen financial collapses many times and they always end the same way. New laws are written that grossly favor the rich and screw the middle class.  As far as a total meltdown goes, it can't happen.  The rich can't let it happen. If the dollar becomes worthless then Japan and China are out trillions and no place to sell their stuff.  They can't let it happen.  The markets could plunge and shake out the weak sisters but everything will come roaring back.  The world's rich will make it happen.  Unlike other financial colllapses, the rest of the world is closely linked to the US markets and they HAVE to help us to help themselves.  I think bad stuff is going to happen but it's getting really overblown.

Tue, 11/05/2013 - 13:35 | 4123257 uncle.bigs
uncle.bigs's picture

Stocks are in the hands of pension funds, 401k plans and IRA's.  Corps are buying back stock big time.  Stock are in strong hands.  The skyrocketing margin debt is short sellers who are borrowing on margin to hang onto their shorts.  Margin calls are forcing buying not selling.

Tue, 11/05/2013 - 13:40 | 4123285 DrewJackson
DrewJackson's picture

 

 

I think the Obama administration is not going that far back in history....  Following Mao, and Stalin both who had lots of miles and land to deal with.

Tue, 11/05/2013 - 13:52 | 4123333 zebrasquid
zebrasquid's picture

every movie that features a "magic Negro" ends well, so just put your feet up on the seat in front and enjoy your overpriced stale popcorn!

Tue, 11/05/2013 - 13:54 | 4123343 Sufiy
Sufiy's picture

How can they stop now? It is impossible: rates go up, stockmarket goes down, economy goes down, interest payments goes up, defficit goes up, dollar falls even more...


Taper Anyone? China, Interest Expense On The U.S. Debt Outstanding And Gold. 


US Dollar is running wild today trying to understand the FED's talk. "We will taper at some point data permitting, but will keep ZIRP until 2016 now" - with this kind of double talk from the both sides of the mouth anyone can get confused very soon. What is the best cure from the Taper Impulsive Disorder?  - Higher Interest Rates.ZeroHedge reports that they are moving up fast with the first sign of Taper confusion in the headlines and below you can find the reason why it is impossible to Taper anything now.    Amount of US debt is so huge at 17.1 Trillion, that interest expense is second largest after 2011 even with record low interest rates and stands at 415.7 B by the end of October 2103. Now double it and apply to US Economy general statistics, then do the same after listening to John Williams from shadowstatistics.com about the real numbers. We guess that Chinese have run these numbers long time ago and buying all physical Gold now they can get. http://sufiy.blogspot.co.uk/2013/11/taper-anyone-china-interest-expense-on.html#

Tue, 11/05/2013 - 13:57 | 4123350 SmittyinLA
SmittyinLA's picture

People holding cash are getting killed and gonna get killed, the smart move is to trade the fiat as fast as possible.

Why hold something the govt prints at will on the expectation they'll stop printing and be eaten by their base?

The Chinese, Indians, they're trading their fiat currencies for "stuff" as fast as possible.

When the music stops the cash will be worth nothing, real assets will be king, not fiat.

Tue, 11/05/2013 - 14:06 | 4123395 pirea
pirea's picture

Not considering that all the accounts will be for sure Cyprused

Tue, 11/05/2013 - 16:17 | 4123900 robertocarlos
robertocarlos's picture

I am expecting a cash position will pay off during the short period between when the ATMs stop working and the riots beginning. A few days to buy everything in sight. i've seen those videos where the guy can't give away a one ounce gold coin.

Tue, 11/05/2013 - 13:59 | 4123354 dadichris
dadichris's picture

When is someone (who matters) going to stand up and say that the Fed is out to destroy the USD as the world reserve currecy?!?! 

Why would they do this?  Well, the Central Bankers have everything to gain by creating a supranational currecy. 

When you have a successful criminal enterprise the first thing you do is consolidate and expand.

 

 

Tue, 11/05/2013 - 14:03 | 4123384 shankster
shankster's picture

I'm holding all $5 of my cash right now.

Tue, 11/05/2013 - 14:04 | 4123391 Save_America1st
Save_America1st's picture

Bart Chilton (or as Turd Ferguson calls him, "Thunderlips", has resigned from the CFTC:

http://www.cftc.gov/PressRoom/SpeechesTestimony/chiltonstatement110513

See ya, douchebag...way to be nothing but an ineffective shill for the bankster scum. 

Tue, 11/05/2013 - 14:42 | 4123536 Herd Redirectio...
Herd Redirection Committee's picture

Revolving door, here I come!  21st century corruption, folks, this is what it looks like.

"at last—with the process coming nearly full circle, I can leave. It’s with incredible excitement and enthusiasm that I look forward to being able to move on"

Tue, 11/05/2013 - 14:05 | 4123398 shankster
shankster's picture

Someone (anyone) please give me some cash to hold.

Tue, 11/05/2013 - 14:07 | 4123399 DOT
DOT's picture

While we are still talkin' cash, my soon to be former, bank has informed me that  payments against my account will be withdrawn on a "send by date". The system will select Corp. check or personal draft when payments are sent via snail mail. Electronic payment is also an option for them. "The system" will, of course, pay only on presentment of a check or draft.

Only if you call and wait on the phone for a 1/2 hour will they let you know how it's going to be. The branch manager did not know how the "new system" would function.

Tue, 11/05/2013 - 14:10 | 4123416 lasvegaspersona
lasvegaspersona's picture

Excellent point..'they are even printing more money than the deficit.'

This seems to be significant. I have assumed that the main reason for QE was to fund the USG and prevent a drop in GDP (which would announce that we are in a depression).

Exceeding that sum what are we saying? I think we might be saying 'hey, things are worse than you thought. If we don't do this something even worse than just looking bad will happen'.

What could that be?   I dunno total societal collapse? Iit would be nice if the governing would stop treating the governed like a bunch of children and have a frank discussion of our situation. I suspect things are way beyond that as panic would ensure if we got a whiff of our true course.

Tue, 11/05/2013 - 14:27 | 4123477 therevolutionwas
therevolutionwas's picture

I think the FED is trying to kick start the economy...it's not working, so they keep upping the anty.

And as far as ..."total societal collapse..", ...From all the news about FEMA camps, militarizing the police, IRS buying ammo and weapons;  it sounds like that is what they are planning on.

Tue, 11/05/2013 - 14:46 | 4123546 edmondantes
edmondantes's picture

funny that Sternlicht doesn't seem to understand that "it" can never "end"... rates can never rise... 'they' cannot stop... and 'they' know it ... and after the last bout of jawboning proved to be completely false we should also know it too

Tue, 11/05/2013 - 16:46 | 4123631 Kirk2NCC1701
Kirk2NCC1701's picture

Barry Sternlicht*, Barry Sotero:

 

Star light, star bright,
First star I see tonight;
I wish I may, I wish I might,
Have the wish I wish tonight.

Yeah, well, I know hundreds of millions of people who'd like to wish upon a star, but we won't see them or their concerns on prime time any time soon.

* Sternlicht = German for 'Starlight'

Tue, 11/05/2013 - 15:21 | 4123658 Trimmed Hedge
Trimmed Hedge's picture

I'm just gonna hang out at Taylor's house until it blows over...

Tue, 11/05/2013 - 15:30 | 4123687 tradewithdave
tradewithdave's picture

If cash is the bubble, how do you pop it? Altucher 20,000. Jus' sayin' ...

Tue, 11/05/2013 - 15:29 | 4123690 alfbell
alfbell's picture

 

There is always a deflationary phase with a big crisis. That is why you hold cash. When it happens, cash is king, you take your cash and buy a nice property with water, room for crops and room for rental properties (so that you can have a community and rental income). Best to buy a property that is smack in the middle of a farming/agricultural area. And you buy food, tools, cars and other tangibles and barter/sale items with the rest of your cash. Now you've got water and food and shelter and income in whatever the new currency is, due to your rental property and sale items.

Gold and silver might be helpful but it is only a small part of the solution. Gold can remain stagnant or continue to drift down for many years. It is only a commodity now, not a store of wealth. Gold will rise only when the masses lose confidence in their government and currency. That is a long time coming.

Hyperinflation won't happen: we have the biggest bond market in the world and a printing press (hyperinflation only happens with governments that are revolutionary and have no bond market to protect). I believe there will be plenty of time before the USD loses its reserve currency status and is taken over by IMF SDRs or some other international electronic currency or basket of currencies. TPTB are desperate to maintain power and to be "right". They'll keep this boat afloat for a long long time. They have the means to do it.

The doom and gloom has already happened and will be ongoing (remember the frog in the pot of water meme?). There won't be any Armageddon or Apocalypse (all the Mad Max guns, ammo, gold, gas, etc. just doesn't make sense to me). Just the haves and have nots, living in a dysfunctional, deteriorating society. Water, food and shelter and tradeable skills is the real wealth. Just set yourself up so that you have those possibilities. I'm betting on "CASH WILL BE KING FOR A PERIOD OF TIME" for the future (and one will have to have it and act fast with it in order to create a decent future for themselves).

I believe we still have some time to get our ducks in a row. My wife and I are amassing cash, paying off all debt and building up our health right now as the first action.

 

 

 

 

Tue, 11/05/2013 - 16:12 | 4123880 robertocarlos
robertocarlos's picture

My personal cash on hand position is getting out of hand. It's a good thing I don't smoke crack.

Tue, 11/05/2013 - 16:40 | 4123992 theprofromdover
theprofromdover's picture

Bernanke was worried about his legacy, so couldn't contemplate tapering.

4cheeses sake, Bernanke!! YOUR legacy?

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