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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (12081)4/16/2004 7:49:15 PM
From: Jim Willie CB  Read Replies (1) of 110194
 
I vividly recall the painful process in 1994-1995
raising interest rates comes with much unwinding
the biggest area of futures contract speculation is TBonds

now in 2004, we have roughly 3x as much TBond open interest
so expect any adjustment to be more painful

I wonder if we get it at all
if rising costs result in lost jobs, declining income, more debt default and bankruptcy,
we will not see typical inflationary pressures
we will continue to see the opposite

damn, we are setting up Asian abandonment
our future lies in Asian creditor hands
I see Argentina-like foreign capital flight in the midst of Japanese-like liquidity trap closing

the Fed would really love to see yet another round of housing price spurts and REFI's
sad and tragic, but true
this is how the Liquidity Trap closes
right now, the Trap has plenty of liquidity
in coming months, it might not

the onliest way to avoid full closure of the Trap is to trigger a bond adjustment series of events, forcing rates higher
I dont see that kind of intestinal fortitude
not even close

our Folk Hero Mr Magoo would be spitting in Wall Street Bankers faces
not gonna happen
we have monumental bond volatility upcoming

/ jim
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