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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (3630)	12/19/2003 10:38:05 AM
From: Real Man	Read Replies (1) \| Respond to of 110194

>Corporate and junk bonds have credit risk. >US treasuries do not. (or the whole world goes to hell) Yeah, this is a basic assumption undelying the credit bubble. It used to be different in late 70-s -g- >Because printing is failing to produce inflation other than in commodities. >That is why. I think the spec community has been given a green light by Greenspan to speculate in carry trade. In the past, dollar decline of half the magnitude that is now always produced a major bear market in bonds. The spec community will then happily short the short end of the dollar, and move their assets into commodities and foreign currencies. Is there inflation or not? I'm not sure I would trust the BLS, with all their hedonics. After all, if I bought a house and paid for it, they would count $2000 per month in GDP that I have to pay myself to rent it. $2000 per every American per month translates into GDP of 7.2 Trillion dollars. Then again, I could say, I pay myself 2500, cause housing prices ROSE! Surprise! We get 25% immediate GDP growth -ggg- All this is a credit bubble, in it's pure form. 4.2 Trillion $ abroad, in treasuries. Just a little selling (only 20% would be enough), and Greenspan is History. Then risk in treasuries would be re-discovered. The losses are real, on that 4.2 Trillion $ treasury position, and foreign CBs hold only 25% of that. Real to these foreigners, who see that part of their premium is gone now, not just interest.