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Strategies & Market Trends : The Residential Real Estate Crash Index
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From: Tommaso11/8/2010 4:35:03 PM
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I was just looking at my brokerage account and noticed that I could use margin to buy treasuries worth six times the amount of stock I could buy on margin.

Yet a twitch upward in interest rates would trigger a margin call that would destroy the entire account.

That's where the bubble is--not in gold. A person with $100,000 can control a million dollars in treasuries. Just like stocks bought on margin in 1929. A million dollars of treasuries at say 2.5% interest rate becomes worth about $800,000 if the interest rate goes to 3%. Make that $500 million held by a bank and the loss is $100 million.

And the Chinese have the power to cause this to happen overnight. They can destroy the U. S. financial system any time they want to, if they are willing to swallow their own losses.
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