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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (37887)8/5/2005 1:41:04 PM
From: russwinter  Read Replies (1) of 110194
 
We keep talking about different kinds of debt. The fixation here seems to be on US Treasuries, specifically the ten year? So let me spell my position out straight once again. I would not own any Treasury out beyond 2 or 3 years. For a person with wealth in cash form, I might recommend putting 3% into the three year auction next Tuesday, and then 3% more in the two year later in month if rates are above 4%, other than that 90% should be held in T-bills under one year. I think just about every other form of non-sovereign debt securities (with special focus on agencies, MBS and ABS) are going to get the shit kicked out of them.

Once the flight to safety, deleveraging events develop, we will have to closely monitor the Wizards response. If it's the Ben Bernanke approach then it will be necessary to find real goods (that are not already leveraged to the hilt) for hyperinflation protection. But at this moment I would be cautious about those because they could liquidated during the Bust/Panic phase, with the probable exception of gold. If the response to a panic is more muted, then we can entertain deflationary approaches. Although I have my own strong suspicions, about what the response to a Bust will be, I'm not ruling anything out, and will just watch carefully, letting others engage in academic debates about "inflation or deflation".
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