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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (24488)	1/12/2005 4:30:09 PM
From: gregor_us	Read Replies (1) of 110194

I May Have Discounted Too Much the Political Ramifications for Japan, should they have to start booking severe, annual reserve losses on a tumbling USD. Koizumi may have to think seriously about this--even though, practially, all they did was print Yen to buy the dollars. The economic-protection benefit has already been realized in their economy--so "losses" on Treasuries going forward really don't matter at all. Except, politically. Japan is effectively imprisoned with their Treasuries. I have granted such pressure on the ECB could very well happen, though. Don't think the Europeans are going to let the ECB do too many writedowns before political heat grows. For China, I don't think it's an issue. Like Japan, they too have already realized the benefits. Unlike Japan, they don;t have to please their populace--on this issue, that is. The US bond market needs to be most concerned about the Offshore Accounts, holdings by Russia, and to a lesser extent Europe holdings. There is no Dutch Banker to commit suicide over this but there are plenty of Hedgies who could if they're not nimble. LP

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