Wall Street is bracing itself for a doomsday scenario. Read between the lines of the news reports and you learn that Wall Street players are preparing themselves for a possible US default and fallout.
The New York Times reports that Wall Street firms are "taking steps to reduce the risk of holding Treasury bonds or angling for ways to make profits from any possible upheaval." It also reports that hedge funds are stockpiling cash so they can buy up United States debt if investors flee and investors are starting to sell, fearing that the US government will not meet its interest payments due next month.
In a sign that seasoned players are worried, Bloomberg reports that the Quantum Endowment Fund run by George Soros has now reverted to 75 per cent cash, obviously sitting back and waiting for some bargains as the price of assets collapse. When hedge funds are sitting on cash, it's a bad sign. It tells us that they see a mega-collapse.
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