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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: nextrade! who wrote (11582)	7/12/2003 8:34:08 AM
From: nextrade!	Read Replies (1) \| Respond to of 306849

Government Re-fi’s Versus Homeowner Re-fi’s financialsense.com I find it interesting to see our government aggressively reducing debt on longer maturities and re-financing all of our country’s debt to ten-year maturities and less. At the same time, the policy of our officials has encouraged all of us citizens to re-finance our short-term debt and revolving credit into 30-year mortgage paper. Quite a dichotomy, isn’t it? Maybe I’m beating it to death, but how are they going to keep long rates down? We have a global bond market bubble on our hands. The official interest rate for the euro is 2%, for the U.S. dollar it’s 1%, and for Japan it’s close to 0%. These economies represent about 80% of all global debt paper. With bond prices at the high end of the stick, there isn’t much room to go higher, but lots of air underneath. If money tries to exit the three bond markets mentioned above because of rising rates (falling bond values) there is nowhere for all of that money to go. It’s just too big! When bonds finally top-out, and some believe they already have, there is nowhere to go but down, nowhere to run – nowhere to hide. When we see some real cracks in the bond markets around the globe, that’s when you will know that paper money is gonna get torched! If the Fed is forced to monetize U.S. Treasury instruments, it will be a crushing blow to the strength of the dollar. The Fed is truly between a rock and a hard spot. There was much more that happened in the markets for the week, but I believe very strongly that what ever happens in the bond market will probably dictate what happens with stock and commodity prices. In parting I will say that commodity prices have remained stubbornly high, and are poised to make another leg up. Oil added about a dollar a barrel this week and silver is waking up for the big run through the $5 barrier. Silver stocks had a great week, while the action in gold stocks was fair considering the lid on the gold price. When bonds begin to break down in earnest, it won’t take much to push precious metals through the roof as the final safe haven in the asset flight to safety