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

To: russwinter who wrote (6635)	1/31/2004 8:29:18 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

I understand, but I would say this -- foreign liquidation of US treasury debt is a very remote possibility -- extremely remote. If there is a crisis of confidence in US treasury debt, such that foreigners really do sell en masse -- it will be accompanied by a general crisis in fiat money. They are practically the same thing now. I'll say again, at the risk of being called "one of those &%$## lunatics" -- in either instance -- a debt collapse under its own weight -- or your preferred national debt crisis -- you will want to own gold. The Japanese have had bad debts on the books for years -- I know that the situations are a lot different given our current account deficit, but methinks denial will be denial, will be denial -- what is going to make them want to recognize the losses and send us further into a tailspin when demand is weakening already -- I sure don't see public pressure doing it -- otherwise Japan would have had a massive writedown of bad debts accumulated in the 80's sometime in the 90's. I think the bond collapse theory suffers from a denial of the global nature of the problem.

To: russwinter who wrote (6635)	2/1/2004 9:12:38 AM
From: Crimson Ghost	Read Replies (1) \| Respond to of 110194

I don't know if you recall the 70s bond bear, but I do. Interest rates surged far beyond what even the most extreme bond bears anticipated at the beginning of the decade. I expect a repeat over the next few years. Rates will not reach 1970s double digit only because of a lower starting point IMHO. But I would not be surprised by high single digit T-bond yields before we are done. Markets that are artificially held down have a way of swinging to the opposite extreme when the rubber band finally snaps.