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: geewiz who wrote (90193)	1/8/2008 5:01:04 AM
From: Mike Johnston	Read Replies (1) of 110194

"What vehicle would be of best service to short the treasuries irrational behavior" Short answer : buy gold. Long answer: Treasuries is the easiest market to manipulate and manipulation of that market might provide the biggest short term benefits to the economy. In fact this is the one market, which is the foundation of the "asset inflation/negative interest rates" failed US economic model. Given this fact, there is a potential for massive fraud, manipulation and distortion of that market. If the Fed is pegging long rates, by definition, you will not make any money shorting bonds, despite the fact that holders of bonds will lose most of their investment due to skyrocketing inflation, although nominal prices of bonds will stay the same. DISCLAIMER: IMO Fed is pegging long rates. If i am wrong on this, then in fact interest rates will soar at some point and better strategy would be to short bonds outright. Sharply higher rates would be negative for gold in that scenario. However rates would have to soar north of 10% to make gold unattractive.

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