The Phaserl


The WORST Asset Class to Own During the Collapse…

from The Wealth Watchman:

“It was the best of times, it was the worst of times”…

Those truly immortal words from Charles Dickens’ story, “A Tale of Two Cities”, are timeless.  When I was young, I wondered what on earth those lines even meant, but believe me, I don’t wonder any longer.

As I’ve all grown older, I’ve come to realize that those lines can apply to almost any age you could live in.  In every single generation, there are those who are primped, oblivious, wicked, or simply living in a fake, bubble world.  While alongside those awful types, are the very honest and righteous among us, who are fighting for a better world, or just the hope of seeing a little justice before our time on earth is up…

That’s why the words recently spoken in a Bloomberg article are such a troubling sign that many uber-wealthy elites, even many ‘insiders’, like everyone else in our time, simply don’t have a clue…

Investment in Ego

Yes, this article recently demonstrated that having wealth does not guarantee either foresight or intelligence.  On the contrary, it confirms that the newest fad for the uber-wealthy(buying “Ultra-luxury homes”) is a perfect symbol for the utter decadence and irredeemable narcissism of our age.

For you see, not only are these coveted, $100+ million dollar homes more in vogue than ever, by the financial elites, they are considered a safe and rock-solid, anti-bubble asset!

“Holy cow!  $100 million bucks for a house?!  Who, in their right mind, would pay that?!”

Plenty, believe it or not.  Lest you doubt the verity of that statement, take a look at a few houses that have actually found buyers for over sums that large:

This house, the Copper Beech Farm, recently sold for $120 million dollars in Connecticut.


Source: Christie’s International Realty


Or how about this 35,000 square foot, palatial residence, out in Beverly Hills, with its own vineyards, and listed for an unbelievable $195 million dollars?


Marc Angeles, Coldwell Banker via Bloomberg

Marc Angeles, Coldwell Banker via Bloomberg

Now, brothers, if you’re looking at all this and thinking:

These folks are sinking billions in homes at new all-time highs?  Didn’t they learn anything from the last housing bubble whatsoever?

Then don’t feel bad, as you’ve got more street smarts than many billionaires on this point, at least. It doesn’t matter what country these elites seem to be from either, as “caution” and “discretion” don’t even seem to register in their language’s vocabulary.  In fact, when one of these property moguls was asked in the Bloomberg article, about the danger of there being another bubble, this is what he said:

“The fact that asking and sales prices for ultra-luxury properties are reaching new heights isn’t a sign of problems in the broader market and shouldn’t raise concerns that last decade’s housing bubble will be repeated, Conn said.

“I think of this market as fundamentally different from the rest of the market,” Conn said in an interview Thursday on Bloomberg Television’s “Market Makers.” “In order to buy one of these properties, you have to be in the billionaires club.”

Sooooo, this gent thinks that these buildings(which can only be afforded roughly by a few thousand folks on earth) will sustain their elevated values indefinitely?  And he circularly bases that belief on the notion that the great wealth of “the billionaires’ club” will always shield them, and their peers from experiencing losses like everyone else experiences?

What could possibly go wrong?!

That’s not all though!  If you thought this sort of hubris took the cake, then wait til you hear the reason given by this man, as to why such homes are highly-prized right now by the elites(from the same article):

“People want trophy homes,” Eyal Ofer, a Monaco-based shipping and real estate magnate, said in interview earlier this week at the Milken Institute Global Conference in Beverly Hills, California. “They’re a scarce commodity. And they’re better than gold because you can boast about it.

And just like that, with one painfully-honest statement, you have the entirety of our age, wrapped up snugly, in a single soundbyte.  The “value” to such people isn’t even about the money, because, they’ve already got “all the money”.  The perceived, greatest value is solely to be found in how much one can puff themselves up over it.  

2008’s Victims

The truth about billionaires though, is that they’re normal people, just like you and I.  Not only are they not immune to losses, they can lose wealth with the best of them.  If you trust wealth to be your ‘high tower’, your wealth will fail you, and 2008 is a stark reminder of that truth.

Just consider these few billionaires beneath, who didn’t see the 2008 financial crisis on the horizon, and lost vast sums because of it:

Bjorgolfur Gudmundsson: who made a fortune as a shareholder of Iceland’s largest bank, Landsbanki, filed for bankruptcy in 2009, is now literally broke and penniless.

Sean Quinn: or how about Irish property Mogul, Sean Quinn, who at one point was worth over $6 billion dollars?  He’d been flying high, until morning he woke up to find that the property bust had wrecked Anglo-Irish bank, which he’d placed much of his fortune into.  He went from $6 billion, to being forced to file for bankruptcy, which he only recently was discharged from.

There are dozens of cases, just like these ones, from the last financial fall-out alone.  The point is: wealth is not a constant in this life, it is truly “easy come, easy go”. Nothing is more fickle than monetary success.  

The Unspoken Danger

When liquidity was revoked in 2008, the banks all seized up, lending stopped, and housing values(including most “ultra-luxury” properties) collapsed.

Statements like the one in the Bloomberg article, are proof that many of the uber-wealthy in our time, have already forgotten the invaluable lesson that 2008 should’ve enshrined for everyone.

They’re still not asking the tough questions that common sense should demand of them.  Questions like:

“Have the problems, excesses, and debts of the system been fixed since 2008?”

“If not, what will happen the next time there is a liquidity event?”

“Without easy credit, and endless, central bank money flowing from the spigots…where would interest rates really be?”

“If those interest rates wouldn’t be 3 or 4%, on a 30 year loan, but rather 10% to 15%(or higher), what would my “trophy home” be worth on the open market?”

To be sure, these questions alone should make someone think twice before sinking that kind of wealth into such an asset….but remember this crucial point:

In the next economic event, when the banking system locks up, credit is gone, and the cash stops(or is ‘bailed-in’)…the crisis won’t merely be a banking crisis, but a sovereign, currency crisis….international in scope.

Because this is true, the most important question for those wealthy individuals should be this:

What will the literally penniless, rage-filled masses do when they come across a property like the one I just bought?

Remember Dickens’ account of the French Revolution?  The masses had become so angry at the wealthy among them, that they actually began to systematically kill off an entire class of people.

For those who think the sort of societal unrest we’re now seeing in Ferguson, Missouri, or Baltimore, Maryland, are “one off” events, which will quickly blow over….you are sorely mistaken.

Ferguson and Baltimore are the dress rehearsal, folks…..the main event hasn’t even begun yet.

Remember 50 million people in the US(roughly equal to entire nation of Spain) are only barely getting by due to things like food stamps, and EBT/SNAP programs.

I remember vividly, getting a picture of just how bad things will be when the system ends.  Two years ago, in my hometown, there was a “glitch” in the EBT/Snap account system….and the EBT cards stopped working…

Guess how long it took for the looting to begin at the local Wal-Mart?

1 hour.

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16 comments to The WORST Asset Class to Own During the Collapse…

  • Sheryl Anne

    Exactly right Wealth Watchman. The rage has not even begun – I say get out of the
    system as best as you can – prepare for the worst – whatever your skills are you might
    want to sharpen them for self-employment one day. But prepare – now.

  • Johan

    Stocks would be a worse investment

    • Ed_B

      Perhaps. But we won’t KNOW that until it happens. Until then, we think that this will be the case but we also need to remember that the 1929 US stock market collapse and the worldwide decade-long depression that followed did not destroy very many of the big cap blue chip companies. IBM, General Motors, Ford Motor, AT&T, the big banks, and many others survived that depression and likely will survive the next one too.

      • fonestar

        Houses are worthless when they’re in a slum. Cars and trucks are worthless when you can’t buh gas.

        Bitcoin is always priceless!

  • jj


    May 5, 2015., 2:20 pm • Reply

    Most billionaires didn’t get that way being idiots. The fact is these people know that the paper financials could turn suddenly. They want to protect themselves from this potential. They had to turn to hard physical assets, ie, real estate. These assets are worth more today than in the previous collapse and they will be worth more a few years after the next collapse. Even if the value falls during a crisis, it always rebounds. The billionaires know this. As with gold, it is a way to protect your net worth over the long term. Real estate never goes away, like gold it is an asset that you can “touch and feel”! Which would you prefer, a paper derivative or something you can actually walk on? Most individuals buy gold and silver for all the wrong reasons. They buy as an investment hoping to strike it rich when and if the value increases. The fact is, you should buy PMs as an insurance policy and nothing else. If you are an investor, there are other investments that will bring a higher yield. There are voices all over the internet stating that PMs are going to go to the moon. So when they buy and realize that they are making no return, they become upset and angry. When buying for the right reasons, you never follow the daily price swings. You could care less if the value goes up or down. You know that if the financial system collapses, you can protect and take care of your family. Buying for any other reason is just plain gambling! jj

    • Fred Hayek

      True, there are probably very few idiot billionaires. But intelligence is not wisdom. They’re not the same things. And excessive affinity for one’s own intelligence can lead one to do incredibly unwise things. It can lead one to refuse to question the present order of things because one’s feeling of status is derived, in part, from a belief that you succeeded in a true meritocracy of open competition. I would guess that billionaires would be some of the people who least want to ask themselves if the present economic paradigm in which they feel they’ve triumphed, is false, fragile or about to change.

  • Ed_B

    “Real estate never goes away…”

    Well, almost never. Earthquakes, landslides, and volcanoes, uncommon as they are, can all damage property to the point that it is absolutely unusable and therefore of no value whatever.

    • Eric

      All wealth comes from land. Land can change form, but it rarely goes away completely.

      A wooden box on top doesn’t necessarily improve the value of the land. Just the structure.

  • Ed_B

    “What could possibly go wrong?!”

    LOL… other than damn-near everything? This question is one of those better left unasked because sure as hell once this cat comes out of the bag, a lot of bad stuff will happen.

    “Just consider these few billionaires beneath, who didn’t see the 2008 financial crisis on the horizon, and lost vast sums because of it”.

    Events like the 2008 financial crisis are almost always unseen until they happen. This is how the future works. We simply do not know what is coming or when it will get here. All we can do is gather as much info as we can, sift through it for that which is worth keeping and toss the rest, and then try to get some general idea of the trends at work in our world. This can give us part of the picture and then we end up using educated guesses and history as our guides as to what MIGHT happen in the future. Once we have some idea of that, we can allocate our resources towards improving our lives should this or that actually happen. There are absolutely no guarantees in any of this, however, much as we would all like there to be some. One thing that we do know, however, is that anything that has happened before certainly can and very well might happen again. It is not guaranteed to happen, though. Nothing that broke in 2008 has been fixed but things have become worse because the level of debt and derivatives are much higher today than they were 7 years ago. These are the things that can fuel a collapse, so the next one could be a real doozie.

    “Nothing is more fickle than monetary success.”

    Many things can be fickle… government… banks… our love lives… our kids… our health… hard to say which is more or less fickle at any given time.

    “Statements like the one in the Bloomberg article, are proof that many of the uber-wealthy in our time, have already forgotten the invaluable lesson that 2008 should’ve enshrined for everyone.”

    2008 was 7 years ago. It’s possible that many of today’s billionaires were not billionaires back then but were struggling to become billionaires. Those who get painful lessons in life tend to remember them for a LONG time.

    The Great Depression of the 1930s scarred my Mom so badly that she was absolutely terrified of poverty for the rest of her life… even when she became well off financially, she always pinched her pennies as if they were the last ones she would ever have. But not everyone learns lessons like that from their experiences. Some just laugh it off, say “easy come, easy go” and get on with re-creating what they had before.

    “Guess how long it took for the looting to begin at the local Wal-Mart?”

    Not long at all… or, was that just the excuse used by those who really wanted to behave like animals but had no excuse to do so before the EBT / SNAP cards quit working? One look at the behavior of the Black Friday “shoppers” is all anyone really needs to figure out what will happen when the food stores are empty of all but a few final items. If we think we’ve seen violence over a pair of sneakers, a jacket, or a cheap flat-screen TV, we ain’t seen nuthin’ yet. When the SHTF, it will be time to lock, load, and lay low. Those who have enough food and water that they do not have to go out of their homes for weeks or months will be well advised to hole up and not make targets of themselves. Be watchful and stand ready to defend your family and property. A lot of people are gonna get dead during the first few weeks of a SHTF scenario. Don’t be one of those people.

  • petedivine

    Watch the govern_mint. They are inflating the debt away. What are the super wealthy doing? The same thing. Buy a house or commercial property in soon to be worthless dollars. When inflation destroys the value of fiat it also destroys the value of debt. Why else would they do it? The dollar, your savings, and your debt will be devauled. That’s how I interpret the sprint for assets by the super wealthy.

  • Eric


    Hijacking history in Jews’ unholy books

    “Never did any Israelite set foot in ancient Palestine or Egypt. (Forget all the – concocted- Biblical stories you were fed/told happened in Palestine and Egypt)”

  • tayronachan

    2 yrs back, in Rocky Mount NC, a lightening strike took out the EBT connection in a supermarket on the 1st of the month. Within 30 min, people were walking out with unpaid carts of food. Even though a block away there was another store with a functioning EBT connection. That’s 30 min people.

  • Daniel

    The problem with the world is….who wants/needs to be a billionaire? You can’t possibly spend it all, and if you did, where would you be after that? And when you die, you can’t take it with you. I seem to remember a Bible verse that says, “Those that are first will be last, and those that are last will be first”. Matthew 20:16. These idiots who live in mansions think they’re safe, and insulated. Who will be the first to feel the wrath of hungry, starving people when the SHTF? You rich fuckers have enough security to hold off the mayhem that will come your way?

    I own my home. Outright. Took almost 28 years to get it paid for. A modest house, maybe 180K, very nice after I fixed it up. I don’t need 50 acres and 3 swimming pools and a vineyard that I have to pay someone to maintain. I have 2 children in their 30’s, grandchildren, a great wife of 38 years, and I consider myself the richest man on the planet. And if the SHTF and they come to take my modest possessions from me, I only know that it is a far better place I am going one day.

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