Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (13500)	10/15/2004 9:14:40 AM
From: zonder	Read Replies (2) \| Respond to of 116555

I doubt if Asian central banks are buying USD debt because they sleep soundly when their money is in USD rather than in local currency. More likely, they are doing it to push their own currency down relative to USD.

To: Tommaso who wrote (13500)	10/15/2004 9:47:31 AM
From: russwinter	Read Replies (1) \| Respond to of 116555

<The dollar is perceived as a sound currency and the U.S. is perceived as having a very stable government and a sound economy.> You jest surely? My thinking on interest rates and bonds is this: the US needs to finance $650 billion trade deficits and a $500 billion fiscal deficit out of nearly zip domestic savings. See page 1 Hoisington. hoisingtonmgt.com That's borrowing over 10% of GDP per year, which is hardly a sound economy, anything but. Right now the majority of this is done via Asian printing money out of thin air (causing local inflation) and buying our debt. Lately the fed has joined in by monetizing debt (about $45 billion in the last year, but lately running higher). They just bid and bid for bonds and few traders wish to stand in the way, so naturally you get a frothy rigged bond market. So to be a bond bull you have to believe there is no end to this, and that few problems emerge from it. My approach to it, is to constantly be alert to a whole raft of problems and maladjustments that arise from this: weak USD, leakages into commodities (widespread now), massive maladjustments in various sectors, potential for major Busts, potential for a Giant Reflux (an end of the game or diminishment of "finance" from Asia). In my playbook I just don't see $100 billion a month of foreign financed US debt as being sustainable in today's set up, and that (plus lies about inflation) is the reason I'm fundamentally a big bond bear.