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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Lymond who wrote (19940)	3/27/2000 11:29:00 AM
From: pater tenebrarum	Read Replies (2) \| Respond to of 42523

John, thank you for this post...you should drop by more often. i agree with you that the treasuries are in a special situation here, and i said as much in my post on MDD on the subject. generally speaking, i still think that the credit markets are showing increasing signs of stress. for one thing i believe that the treasury's shenanigans with buyback announcements and the recent Gensler statement about agency debt not being subject to govt. guarantees (a truism as someone pointed out, nevertheless it seems the market was implicitly assuming such a guarantee existed) have cost many participants a lot of money, and secondly the mountain of USD denominated debt just grows and grows. the problem is, it grows much faster than GDP. note also that the defaults in the below investment grade arena are on a surprising upswing, considering the economic back drop. i shudder to think what will happen in a downturn...eventually there will be a big debt wipe-out, either via inflation, or through a wave of defaults. the statistics should give everyone pause...last year $5,30 in debt were created for every $1 in GDP growth. no way is this sustainable, unless credit creation levels off while GDP growth accelerates (highly unlikely). anyway, it would be highly appreciated if you kept us posted on what you're seeing... regards, hb