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Author: theHedgehog Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10561  
Subject: How ironic is it that: Date: 8/8/2011 8:16 PM
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How ironic is it that the S&P downgrade of the US has caused so much money to move out of the market and into treasuries. Of course the other side of the coin is that the counter-parties to these trades probably pulled their money out of treasuries (at least under the covers) to buy equities.

Hedge
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10511 of 10561
Subject: Re: How ironic is it that: Date: 8/8/2011 11:13 PM
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Some would say the counter party in all those sales is the US Treasury, which needs every penny to cover the huge deficits.

The market is telling us it fears a recession. Hence, the safe move is out of equities and into safe bonds.

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Author: theHedgehog Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10512 of 10561
Subject: Re: How ironic is it that: Date: 8/8/2011 11:30 PM
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The market is telling us it fears a recession. Hence, the safe move is out of equities and into safe bonds.

But my point was that the guy who bought the equities got his cash from somewhere and the proceeds went somewhere, and that somewhere was probably a sweep account, which in turn is in T-bills. For all practical matters, I don't see a lot of new investment in T-bills from this crash, since trades are zero-sum, unless the big traders are buying T-bills directly. And even they have to wait the 3 days for clearing, don't they? Or do I have this all messed up?

Hedge

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10513 of 10561
Subject: Re: How ironic is it that: Date: 8/9/2011 11:02 AM
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>> The market is telling us it fears a recession. Hence, the safe move is out of equities and into safe bonds. <<

Perhaps, but if investors are determining Treasuries are the "safe haven" then the S&P downgrade (from the folks who brought you all those AAA-rated toxic MBS garbage) wasn't really the reason for the sell-off but was just a convenient excuse for increased jitters.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10514 of 10561
Subject: Re: How ironic is it that: Date: 8/9/2011 11:41 AM
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When the US stock market makes headlines for days on end, individual investors everywhere call their brokers and often make the wrong decision: to sell rather than take the chance.

But this is global news. So I suspect the first round of selling was investors in Europe and Asia. Many of them probably own Dow stocks or even Dow Index funds, because that is the easiest index of US stocks for unsophisticated investors to follow.

They sold their Dow stocks. But it would be interesting to learn if their money markets are in US dollers and treasuries or if they have a whole series of currency choices and money markets in each.

Of course the initial moves attracted much attention and resulted in a broader rout.

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