The Epic American Credit and Bond Bubble Laboratory Message Board

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

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To: Jim Willie CB who wrote (27807)	3/4/2005 3:03:55 PM
From: Wyätt Gwyön	Read Replies (1) of 110194

Govt Junk Bonds "Govt Junk" is an oxymoron for two reasons: yield is not "high", and there is no default risk, at least for goverments issuing debt in their own fiat currencies. they can always cover any liability just by printing the money to pay for it. however, to say there is no default risk is not to say there is no value at risk for investors. obviously if debt gets out of hand and money is dropped from helicopters, a day will arrive when the currency loses value. since returns on govt paper are low in absolute terms, and since spread product is less attractive still, i can't see why anyone other than an FCB would want a big position in "return-free risk" just now. personally, i prefer a big GLD position.

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