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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (22)6/13/2003 3:15:49 PM
From: Canuck Dave  Read Replies (2) of 110194
 
The collapse of yield spreads is something Noland talks about a lot.

It goes hand-in-hand with the lower volatility measures. It's the ultimate expression of the Greenspan put. Alan won't let the bubble burst and everyone feels free to speculate like crazy knowing that more credit will be issued to paper over old. There's no fear of downside risk.

It's the same mistake John Law made, and to a lesser extent the Japanese with their non-performing loans. Eventually, somebody tries to cash in their paper profits and the cycle reverses.

When?

CD
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